Capitalist businesses operating in a capitalist country they may be, but there’s mounting disquiet that car retailers are set to announce record profits, buoyed chiefly by booming margins on used cars and staff counts that were cut at the height of the pandemic.
The root of the grumbling is that many took advantage of the various lockdown support schemes, including furlough and tax breaks, but now things are good haven’t shied away from paying large bonuses to their leadership teams or shareholders ahead of returning any of the money into the national coffers.
Firms don’t agree on the issue. Some, most vocally Marshall Motor, have given back vast chunks of support, while the other extreme is exemplified by Vertu, whose 159 sales and aftersales sites put it in the turnover top five.
Its boss, Robert Forrester, reasons that it was forced to close by government “diktat” and the support measures were put in place precisely so that it would both survive and be ready to thrive when conditions allowed.
For Autocar Business webinars and podcasts, visit Autocar Business Insight
Having issued an update stating that profits for the past financial year will be “not less than £75m” (a rise of more than 200% over the previous strong year), he is very much in the spotlight.
Social responsibility has never been more prominent in the general conscious, but Forrester argues that Vertu is doing exactly what the government wants it to do: making money, investing in and creating jobs (including by buying dealerships that others are happy to offload and, most importantly, as a result paying more tax.
Staff bonuses are reported to have risen by £1.9m last year, and that’s the sort of success story that helps to grease the wheels of a struggling economy.
There’s also a certain myopia to the criticism.
These may be salad days for car retailers (if few others), but the spectre of hard times looms large.
New-car supply is stuck at a historic low, with the pandemic and chip shortage now compounded by issues arising from war in Ukraine; quality used car supply is getting scarcer as a result; and the cost of living crisis is set to conflate with recession to deliver the most turbulent economic period for generations.
Even in this record year, this is an industry that will declare only around £1bn of profit from £80bn of revenue. Be in no doubt that the success is hard-earned.
Add your comment