Motorpoint Group PLC (LSE:MOTR, OTC:MTPTF) has noted that macroeconomic conditions continue to create consumer uncertainty, thereby reducing used car demand, although it flagged a return to year-on-year retail volume growth in December and into January.
In an update on its trading performance for the nine months ended 31 December 2022, the UK's leading independent omnichannel vehicle retailer reported revenue of £1,064mln for the period, up 17% helped by vehicle mix and price inflation.
However, the company said its gross profit per unit was below expectations due to higher financing costs and the falling value of electric vehicles.
Although the company did not provide specific profit guidance, it noted that recent reductions in finance commissions and lower gross margin, largely due to the well-documented fall in electric vehicle values will negatively impact profitability and said its board believes these macro factors will continue to impact sales and profitability for the foreseeable future.
In the statement, Mark Carpenter, Motorpoint chief executive officer said: "Motorpoint will emerge from the current depressed consumer market a more efficient business, having made progress on multiple key strategic initiatives. Over the long term we will make further investments in technology, digital development and national marketing, which will be offset to a degree by efficiencies across the business.
"In a period when some of the group's competitors are retreating or lacking financial capability and when current macro headwinds are forecast to continue, the board believes that there is significant opportunity to continue making targeted strategic investment to grow market share and become a highly profitable market leader."
Notwithstanding the difficult current environment, Motorpoint said it has continued to make strong progress on its targeted strategic investments in full-year 2022/23 in order to meet the medium-term growth objectives outlined in June 2021 - over £1bn in e-commerce sales and over £2bn in total sales - and to better position the company for the long-term with a lower cost base, a stronger brand and improved customer experiences.
In the year-to-date, the company said it has invested around an incremental £5mln compared to the equivalent period a year earlier to grow market share, investing in its growing digital and technology capability, and the roll-out of more stores in new catchment areas.
Motorpoint noted that two further store openings at Ipswich and Milton Keynes are planned in the first half of full-year 2023/24. Including the two new planned stores, seven in total will have opened since the company's strategy was announced in June 2021 and more are in the pipeline as it continues to grow share by investing in new market areas.
In early Friday trading, Motorpoint shares were 3.5% lower at 140p.