28 motoring special: BDO motor 150 report
The green light has come on and the high-powered are accelerating away . . .
The UK motor sector is back using all three lanes of the automotive business highway, say accountants and business advisers BDO, compilers of the annual BDO Motor 150 Report
The return of free-flowing business traffic was emphasised as 2014 began, with news from the Society of Motor Manufacturers and Traders (SMMT) that the number of new cars sold in 2013 jumped nearly 11% to 2.26 million – the highest level since the 2008 financial crisis.
The five-year high in new car sales, which saw a 10.8% rise during the year was fuelled by growing confidence, cheap finance deals, and consumer ‘windfall’ cash from PPI mis-selling payments, the SMMT suggested.
The impressive recovery of the sector from recessionary times is no surprise to BDO, which has been tracking the aggregated performance of the top 150 companies in the UK motor sector as a study group since 2009.
The latest 2013 Motor 150 Report reveals that the study group collectively posted sales growth for the third consecutive year in 2012. As such, this
BDO ‘business barometer’ is also an important indicator of our overall national economic recovery, as other industry sectors report growth.
Motor retail is the shopfloor of the UK automotive New car registrations (m) million
2.7 2.5 2.3 2.1 1.9 1.7 1.5
2001 2002 2003 2004 2005 2006 2007 2008 Split emerges as motor sector grows
But, there were notes of warning from Malcolm Thixton, head of BDO’s motor retail team, when he announced findings from the 2013 Motor 150 Report: “In many ways, this is a very encouraging set of results for the motor sector. After several challenging years, it appears that the industry is getting itself back on the road to recovery: turnover is up, gross profit is up and businesses are investing for the future.
“That said, it’s important not to get too carried away. Businesses have had to dig deep into their
Turnover by position (grouped)
cash balances, resulting in a significant rise in gearing. Moreover, the growth that we’ve seen in the sector recently has been patchy and a two-tier structure appears to be emerging for the first time, with the larger players taking advantage of the nascent economic recovery more successfully than their smaller rivals. We’re not seeing a broad-based upturn just yet.
“Businesses that have weathered the tough times will now want to make the most of the recovery. However, no-one should expect an entirely smooth
2009 2010 2011 2012 2013 2014(est)
industry. It contributes £10 billion added value to the national economy and employs more than 700,000 in associated motor retail businesses of supply and servicing. Having enjoyed 22 consecutive months of growth, the UK has now overtaken France as Europe’s second largest car market behind Germany.
The UK motor sector is actually … motoring along very well.
ride from here, or rush to abandon the careful strategies that have carried them safely so far. There are still plenty of potential hazards on the road ahead.”
• Based on the most recent year for which accounts are available, the 2013 Motor 150 Report showed total revenue for the study group rising by 4.7% from £40.7b to £42.6b.
• However, the Motor 150 Report revealed a clear dichotomy between larger and smaller companies in the study for the first time in its five-year history. Turnover for the 60 largest companies increased by 6.8% on average, while revenue for the remaining 90 businesses fell by 2.9%.
www.businessmag.co.uk
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MARCH 2014
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