Jim Holder The reality of record profits for dealers

Motorway charging unshackled

THE COMPETITION AND Markets Authority (CMA) has agreed legally binding commitments with EV charger provider Gridserve, aimed at incentivising investment in the UK’s charging infrastructure and promoting competition.

The watchdog in July 2021 began investigating Electric Highway (which Gridserve had purchased from Ecotricity two months prior), due to concerns about its chargers dominating the motorway network.

Tesla Superchargers aside, Electric Highway was found to operate 80% of motorway chargers and had long-term (10- to 15-year) exclusivity agreements for two-thirds of motorway service stations.

The investigation aimed to determine whether these agreements with service station operators Moto Hospitality, Roadchef and Extra MSA were in breach of the Competition Act 1998.

The CMA concluded that by preventing the installation of devices from rival firms, the long-term contracts were depriving EV drivers of the “benefits of competition” .

Now Gridserve has agreed to waive its exclusivity rights with those service station operators from November 2026. It will also reduce its exclusivity deal with Moto by two years and with Roadchef by four years. The deal with Extra is due to end in 2026 anyway.

Gridserve has also agreed to waive its exclusivity right if a rival provider gets government funding via the Rapid Charging Fund (RCF) to install chargers at one of its locations.

The three service station providers have agreed “not to take any action that would undermine these commitments” , confirmed theCMA.

The CMA said these agreements will allow for the RCF to be rolled out as planned, therefore providing more chargers from more suppliers. Gridserve said: “We immediately understood why concerns had been raised, as upgrading the EV charging infrastructure at motorway locations is an essential part of the public charging mix and of particular importance to providing the confidence for new motorists to make the transition to EVs. “In order to retain our focus on delivering the necessary infrastructure, we pursued a path towards settlement with the CMA at a very early stage in proceedings, which we’re pleased is now completed. “The settlement was reached without any decision or admission of breach of competitionrules. ” FELIX PAGE

5.1%

Gridserve’s share of the UK rapid charging network, compared with 14.6% for BP Pulse

(Source: Zap-Map)

EV charger users need the ‘benefits of competition’

FEBRUARY REGISTRATIONS UP AS EVs TAKE 17% MARKET SHARE

New car registrations in the UK rose 15% year on year in February, figures from the Society of Motor Manufacturers and Traders have revealed. Private sales accounted for much of the growth, rising 30% . Growth also continued for battery-electric vehicles, which took a 17% market share to 10,417 for the month. Large fleet registrations rose a slow 2%, which the SMMT attributed to “a supply-constrained market” .

BUSINESS

JimHolder

INSIDE INFORMATION

Vertu owns Bristol Street and Macklin dealer groups

CAPITALIST BUSINESSES operating in a capitalist country they may be, but there’s mounting disquiet at the fact that car retailers are set to announce record profits, buoyed 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 that 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 (in the turnover top five with 159 sales and aftersales sites).

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.

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’s very much in the spotlight.

Social responsibility has never been more prominent in the general consciousness, but Forrester argues 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-ofliving 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.

Fat-cat profits rightly draw scrutiny, but these are extraordinary times. The market is with used car retailers today, but there’s no guarantee it will be tomorrow. The moral and economic debates may not be comfortable bedfellows, but the fair-minded might be best advised to reserve judgement for the long term.

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