Motorpoint Plc Ord

Good morning, everyone, and welcome to our full year results and strategy update for the year ending March 2022. Nice to see everybody. Just in terms of our agenda this morning, we will initially go through our full year results from last year, led by myself. Chris Morgan, our CFO, will then take us through some financial highlights. And I'll finally come back and update on our strategy progress and our outlook. So I think to summarize last year, we're very pleased with our results. We took significant market share. We continue to believe our omnichannel model is the leading used vehicle retailer in the UK. And we are now continuing to invest in our profitable medium and long-term growth. Just a quick reminder, Motorpoint Group PLC has two brands. Motorpoint is our consumer-facing brand, the retail brand. selling cars under four years old, under 30,000 miles. Lots of different channels being opened up through that sales platform, from distribution areas such as Sell Your Car, which is our consumer to business portion, and also diversifying our supply base further, given the absence of fleet product in the past couple of years. We also have Auction for Cars, which is an e-commerce wholesale platform And that disposes of motor points, part exchanges that are outside of our retail criteria. I think just looking at the table on page five, you can see what a fantastic year we had. Very successful. All of our KPIs moving the right way, particularly market share, which we believe will continue to grow as we strengthen our price leadership proposition. But more pleasingly for us, obviously, is opening new branches continues to take even more share in the local area within 30 minutes of a branch at 7.7% compared to our national share at 3.1%. Fundamentally believe the omnichannel model of having local representation within half an hour of a customer will dramatically increase our market share going forward. Revenue is up to over 1.3 billion and our e-commerce revenue is roughly half of that at 625. Total units retail and wholesale around 100,000. So dramatically up on last year's COVID disrupted period. And then our days in stock, one of our key measures, making sure we turn our stock as fast as possible down to 54 days again after the disruption of last year. Interestingly, with the increase in average selling prices, obviously drives up our gross profit per unit. Finance attachment rates have increased as well. So we're now almost at £1,450 per unit. And our new strategy to acquire cars from customers and sell them back to other customers, continues to progress with over 11,000 cars sourced from customers and retailed in the past year, all leading to a more than doubling of our profit before tax to 21.5 million. So just continuing into some of the strategic capability, building our marketing presence on our brand is very important to what we do. We are the cheapest, we are the price leader. We need to make sure people know about it. So continuing to invest in our brand is very core to what we want to do going forward. So you can see that increase of customer acquisition costs up to £300 as we build a brand for the medium and long term. It's good to see that we're making some efficiencies through some of the technology that we're deploying with our team. So being more efficient will allow us to maintain our price proposition and our people cost per retail unit comes down to £552, about a £40 reduction there. Opening in new markets, I've mentioned already, we now have got three more markets opened in FY22, another three to come in FY23. So we're now at 17 markets and a big part of changing the mix of what we sell And the inflation that we've seen around 30% of product last year required a big increase in our stocking facility. As our stock balance grew, despite not really having many more cars in stock, the value of the cars in stock was dramatically more, particularly towards the end of the year. We continue to focus on making sure our team and our customers are happy. It's great to see our MPS remain in over 80, hitting 84 in the previous year. and making sure also that our team are happy and we continue to be the number one company in terms of employee engagement within the automotive sector. So just a couple of summary bullets on the next slide, just underlining really that significant progress we've made. Supply challenge continues to be an issue for the whole industry. Cars are not coming into the market as new cars and therefore that feeds through to the supply base of used cars. So we obviously are now a zero to four retailer rather than zero to three, but making sure we focus on our core strategies. There's a couple of updates on that bullet in terms of accelerating our digital offering. 60% of transactions are now online. We talked about opening a new market and continue to do that. Really interested in leveraging our sell your car proposition to continue improving and increasing that as a supply channel. Our MPS leads to strong market share gains. Mark Adams- auction for cars is now an E commerce platform with third party vendors operating on they're selling their vehicles. Mark Adams- To auction for cars customers and again reinforcing the point that we are continuing our strategic investment in our infrastructure technology marketing. Just into technology, so website is clearly a very important part of what we do. A vast proportion of our customers start their journey online, and we are very conscious to make sure that our website is as good as any other one out there. We're not there yet, but we're making dramatic improvements, led by our chief digital officer who joined us in February. And you can see it's good to see that all of those positive trends across those website metrics, growth, conversion, interest and engagement from customers up in all those areas, as well as then increasing our database of customers that we can contact going forward and try and convert those customers further down the line. And continuing into that investment, if you create more traffic, get more engagement from customers, have more content on the website, if you can then increase that conversion from leads and into sales, then the future should look very good for MotorPoint. So I think we come from a position of improving that website dramatically in the past year. We've got lots more coming in the next couple of years, and we'll talk a little bit about that in a moment. In terms of that technology investment, what does it really look like? These are six different areas where we're looking. So building a capability capacity. So I mentioned the Chief Digital Officer now building out our squad-based approach to software engineering. and linking those teams straight into the product owners who now drive the website has meant that we have substantially improved our capability, but also our speed of change and improving that journey going forward. So very much a binary approach to test it. Does it work? Keep doing it and making sure that we drive really hard at that part of it. And new product features coming through like a fully automated reserve online journey. So none of our team touch any of those deals until the car's handed over. So very efficient from our perspective. very much what customers demand. They don't particularly want to speak to people or speak to people in person sometimes, and we need to make sure we accommodate all sorts of customer behaviors going forward. We've improved our search filtering and enhanced the product information page, so really increasing the engagement from customers as to what product they're looking at to make sure that they get all of the features and benefits they'd expect to see when looking for a new car. and being convenient as well. So making sure that our automated order management for a customer, they can do everything that they would need to do without needing now to talk to us. So they can go online and manage their own order, add or remove products, cancel their order, change the car that they're buying, and changing things like their collection dates, which negates the need for them to contact us. In terms of performance, lots of work going on around imaging and making sure we increase image count, getting the quality right, and improving that ability to merchandise the product on the website. And this is all about trading the website more effectively going forward, given the volume of searches and hits that we get on the website. We have a lot of opportunity there. Seller car we mentioned, but just to say that's a very, very important part of what we do is, as I mentioned, the speed at which we do things is really interesting there. Again, it's a fully automated journey. Customers get their money within seconds of handing their car over to us within a branch. And in terms of bidding on those vehicles, when customers enter their details onto our website, it's important that we bid correctly. We have algorithms determining what that bid should be, automatically adjusting the valuations up or down based on the information provided by the customer. And then based on a conversion metric and ensuring that we remain profitable, we convert the customer into a sell your car customer. And just finally, in terms of content, The head of content has joined the business, so lots more to come in terms of video and written content on the website, all of which will improve our USPs on the website with really engaging content and helping to build trust in the Motorpoint brand through our website. However, we do still also have a branch network, so we're focusing very hard on digital transformation, but we believe that that is much more positive when you have an omnichannel model. and that we will continue to open branches in new markets. We take dramatic share increases when we open in a new market, most recently in Manchester, Maidstone and Portsmouth. And these are slightly different models for us. So these are merged teams for sales and customer service. So they're more people light and therefore more efficient buildings for us to run. And they have a slightly smaller display space outside than they would have had historically. So these are places where customers can come in and buy a car, where they can receive their vehicle for handover, or where the home delivery team will be based from, ensuring that we have a true capability on the ground in each local market. And as I say, that really does drive our engagement locally. And as you can see in Q1, calendar Q1 this year, we had an 8.5% market share within 30 minutes of our branches. So really proving that omni-channel experience Just on to the next page in terms of some more detail on our cohorts. So if we look at market share by cohorts, we've got them on the left-hand side. So pre-13 and then three further cohorts. You can see the important thing here for me is that all of our markets are moving forward in market share gains. So it doesn't matter how long the sites have been open, we're still taking share even in some of the markets we've been opening for over 20 years. And I think that's a real testament to the brand continuing to resonate with customers. And price leadership will always resonate with customers, even more so in more challenging consumer backdrop. I think price always wins. Just to play some independent criticism or championing of that message. So we always look externally rather than just looking internally at what we believe. And if you talk to Water Trader, they showed us a presentation recently showing we've always consistently got a much larger proportion of our stock in their well-priced category, and that trend continues to grow. So MotorPoint is the cheapest by far on AutoTrader, and we focus very hard on making sure our price proposition is the very first thing that we look to do. It's really very much at the heart of what we do. And if you ask our customers, another independent third party, 95% of our customers in May agreed with the statement, MotorPoint is unbeatable on price. I think that's a huge testament to how important it is to be price leader, but also making sure that customers know that we're the price leader. They vote with their feet. They will come to us as their budgets tighten. We think that they will really look for that value in the marketplace. And a couple of customer comments below there. It's not just price leadership in terms of the absolute price of the car. It's also in terms of the finance rate that we charge. And so you can see there from a car over £35,000, we're at £7.9. APR 8.9 over 35, sorry, under £35,000. And as you can see, there's a real pressure on competitors to increase their APRs. Many of them have done so in recent months as cost of money increases, but we want to really maintain that competitiveness. And as you can see on the next page, it really plays through into the best value. So these are PCP comparisons. So Fiat 500 is probably one of the cheapest cars we sell. And as you can see, even on one of the cheapest cars we sell, we are £30 to £40 a month cheaper than some of our major competitors at under £200 a month for a Fiat 500. So I think that really resonates with customers when they're looking to reduce their monthly outgoings, come and buy a car from Motorpoint and you pay less monthly payment going forward than you would pay if you went to one of our competitors. For those of the environmentally conscious wanting to drive green, then even on a Tesla, you save dramatically more at MotorPoint. So under £700 at MotorPoint, £900 at Kazoo, £758 at Arlan Clark. I think you can really see for yourself that real focus on price leadership, making sure we continue to invest in our customer proposition, really resonates with our customers. And I'll hand you over to Chris, who's going to go through some of our financial highlights and give a quick performance summary. Great. Thank you.

Thanks, Mark. And morning, everybody. And I speak to people in the room for the first time, which is great. So I might touch on a few of these anyway, but just on to the financial highlights, but a reminder of the headlines. But I think for me, that revenue line really emphasises our market share growth and how that's benefiting the top line for us. And that's falling through. PBT, you can see in EPS, both over 120%. And that's notwithstanding the investment in particularly marketing, but also people in technology, as has already been alluded to. I think as well, just on return on capital employed, it really does sort of show that our capital light model is working. Rocky's now back up to about 75%. So I think that's more normalised levels, but that does show that the capital light model and increased profitability. So if we move on to the operating results. You can see that it started the year very strong, record months in April, May. And I think, as we all know, that vehicle shortages sort of kicked in really from sort of mid-June, about a year ago now, actually. So we are starting to go light for light. with those weaker comparatives. But that clearly did limit our growth in the second quarter and into the third quarter because the stock was harder to get. But notwithstanding that, we're still able to grow the top line significantly. Online, again, successful. 60% of our volumes in the year were online and that, as Mark said before, that's over 600 million, so almost half our revenue. I'm really pleased about the retail gross profit per unit. It's fair to say that was helped by the market in the first half, because we all know prices were going up almost like 5% every month, so clearly that helps. But we also focus very hard on things like preparation efficiencies, and those came down by just over two days for each vehicle, and that's got a big impact in terms of our stockholding and also getting the cars on the pitches for customers. And again, record levels of finance and warranty penetration. So again, really pleased to see those numbers. And hopefully that sort of echoes what we saw before in terms of the APR rates that Mark was alluding to. I think the other points that we'll highlight on this page really is the operating costs. Now clearly that's gone up 63%, about 50 to 80 million. Marketing is a big chunk of that, 12 million. We said that we would invest more to build a brand and that's what we will continue to do. So we spent around about 19 million at marketing as opposed to about 7 million for the last couple of years. I think the point to make about marketing as well, what we're not doing is tying ourselves up into long-term marketing commitments. But what we are doing is very variable. We can turn it on and off each month and we can see what's working, what's not working. And that seems to be successful for us. But it's really important to point out that that 19, 20 million that was found in, you know, a big chunk of that isn't tied up in long-term fixed deals that you're then struggling to get out of. People costs grew by about 9 million, 4 million of that is explained by the CJRS job relief that we had last year, about 4 million. But we did see in the year, Mark again talked about the digital marketing and our IT department as well, where we have invested in people experience and capability. Just a small point that we did receive some CJRS income in April, and that was for the branches we opened, which was in mid-April, but we repaid that back to HMRC. If we move on to the balance sheet, I think the balance sheet is clearly dominated by the increase in the inventory, which you can see has gone up by exactly 100 million, and that's been driven, as we know, by inflation due to our mix of vehicles. And to compensate that, you can see that the stock finance facility which is in the trade and other payables, and that increased from £106 million to £195 million. So of that increase in the stock financing facility, £30 million of that was received in the last week in March, so that we weren't able to use that to fund the stock increase. Subsequently in April and May, and please say that that's exactly what did happen, and so the RCF, the borrowings of the £29 million has been eradicated by May, so by the 23rd of May, we were debt free from that perspective so it just shows that it's just simply a timing of when we received the stock finance and facility support okay the other points really on that to note are on the fixed assets and right of use assets so clearly we bought sorry we acquired three new leaseholds from the branch perspective and also the prep centre in Motherwell in Scotland opened in August last year and that is great news really because it means that we can service Scotland region more efficiently and it supports the likes of Edinburgh which we've now secured and will be open later this year so so that's really good in terms of the sort of efficiencies north of the border we move on to the cash flow I mean the cash flow again it's really dominated by those two the red and the blue line you can see the 29 million of the RCF and then the 40 million of the stock financing facilities or netted stock financing facilities and again because we managed to switch out the RCF in April and in May then effectively those two lines are being eradicated so you can see it was a really a timing blip in terms of the stock financing. Return on capital employees, I think I've already mentioned this, it went up from 50% to 75%, some of that's driven by the operating profit improvements, but it really does highlight to me the capital-like model, leasehold properties, and also the reflection of the stock funding, vehicles are paid for on delivery or collection, so there's no significant debtors in the business. One point on the leasehold model, Stockton on Tees and Peterborough Prep Centre were both freeholds. We've been negotiating to sale and lease those back. Those were in advanced stages at the end of March, year end, hence they were in the asset sale number, the 9.2. Subsequent to that, Stockton was successfully sold and leased back for five million proceeds and no gain or loss. That went through about a month ago and Peterborough was in the final flings various dots in the i's and crossing the t's uh then there's two pages on financial kpis i don't propose to run through these i think it's picked up uh on a lot of them but i think you know uh some of the feedback we've had before i think people like these slides because it does give a good sort of useful reference point uh to various elements of the business but again i think you know some really good stats in there you know not least something about track time uh for vehicles which is which is very strong Okay, and then, finally, slightly away from the finances, partly because I own the ESG agenda on behalf of Motorpoint, so I'll just quickly touch on a few things here. I mean, clearly we're taking responsibility towards the environment and communities very seriously, as I think most businesses are, so of course we would say that. But just to sort of support that, we've now got a ESG board committee that was set up at the end of the year. So Adele Cooper, among others, is chairing that. We brought in the head of sustainability started in October we're partnering partnering with a number of experts out there, I offset go green and it's really about reducing business reducing the emissions and targeted energy savings. we've also written to a number of our stakeholders, that includes some of our investors. as well as other people closely involved with Notify and our people as well internally to see what's important with them. So we've got a top 10 of things that they want us to look at and so we're progressing those plans now. And then finally on that, we're fast tracking our electric vehicle strategy. I mean, clearly at the moment, still electric vehicles are a relatively small portion of what motor points sell, but we know that will change over time quite clearly. So making sure that our operation is right for customers, how we prepare the cars, how our branches look, how our charging points look, as well as the vehicles that we get, making sure that they're at the right price, prepared in the right way, of the right financing. So we're working really hard around that EV strategy to make sure that we stay ahead of the curve as that really evolves. And then just two final points for me. One is that we're carbon neutral on scope one and two emissions, We're working hard on scope three. Scope three is the bigger one because that's all about fuel, business usage, moving vehicles around. But what we have done is that we are leading the way in the industry as we purchase carbon credits to fully offset the customer's first year of driving. So I think that's a really good message. We're now communicating that to customers, pushing it through on our website. And again, it's an education, not both in terms of within the business, but how our customers react and see the most point. So I think that's a very strong message. So we're really going to push that hard this year. And then just finally, for me, there's some points on the communities. But again, I think Mark really sort of drives this on a on a face-to-face basis with a number of people in the business and you can see it doesn't matter people's mix, race, ethnicity, whatever it might be that everybody's treated equally and we make a real effort to ensure that's the case. Okay that's it for me thank you so I'll pass you back to Mark.

Thank you Chris and so just back to me now to update on our strategy progress and our outlook and so as we've spoken already about our progress to to grow our revenues to over 2 billion in the medium term and our desire to continue investing to realize that ambition and price leadership is going to be absolutely vital and while we we talk about it a lot in this presentation to make sure that we continue taking market share just a couple of um bullets for you so 32 progress on our growing our additional uh revenues to be a billion pounds taking our total revenues to 2 billion we're at 1.32 billion as we've mentioned Our e-commerce run rate is revenue targets at 80%. We've got that digital sell your car platform up and running. Auction for Cars is operating as a marketplace and we've secured these new markets, which we've mentioned that is a big part of what we want to do going forward to increase our reach to customers. Just another part on market share. So we believe price leadership, brand awareness, Will continue to take market share in this market. We see others retreating from some of the marketing that needs to be done to build brand in the long term. And we continue to invest in that, believing it's fundamentally important if you are the price leader that people know about you, they understand your brand, they understand what you stand for. And we're seeing great results in that. As you can see on this slide, it shows that the higher the brand awareness of our business within our markets, the higher our market share is. Not really rocket science. Make sure that everyone knows about you. Make sure you're the price leader. You will take market share from others. So we believe others will be retreating, as I mentioned. And during this period of probably a slightly worse macro outlook, we believe we can aggressively take share by responsibly investing. Just a reminder on our strategic pillars. This is the slide that we showed this time last year. Basically around four key areas of our strategic pillars. So number one, rapidly upscaling our e-commerce capability. Number two, to increase customer attention and acquisition. Number three, to grow our wholesale channels. And finally, to make sure we're operationally efficient through using technology and innovation. Just an update on the first one. I mentioned we've recruited our chief digital officer joined in February. We've also appointed a technology advisor to the board who will now lead our technology strategy, making sure that we recruit a new chief technology officer. Us, George Goley, who has experience at Microsoft, Amazon Home Retail Group, worked previously with John Walden, our chairman. But building that new technology capability is really important. Focusing really hard on making sure our product is fantastic. We've got the software engineering capability and moving stuff into cloud where it's the right thing to do in the short, medium and long term. Our technology stack is being replaced, starting with auction for cars platform, but lots of other things happening around the way the business works, using third party software in some instances, but also building our own capability as well at the same time. Using data much more effectively to drive some business decisions, whether it's pricing, whether it's bidding, Mark Adams- On what we pay for cars and looking at customer patterns and behaviors replacement cycles for customers lots of things happening in that sphere, to make sure that we continue driving our business decisions using using data. Mark Adams- And things like paid search a good example of that where we've actually reduced our paid search spend and by really looking at what is actually converting and being very scientific about. going dark in certain areas, upgrading in certain areas, and that test and learn mentality really coming through, certainly in that technology marketing part of the business. We're doing lots more targeted activity around CRM. We've got lots of improvements coming to the retail and the wholesale websites, which I've mentioned already. And we launched an auction cars app in April with vendors able to load their vehicles straight onto our website within a few minutes, which is a much better way for them to retail, sorry, for them to wholesale their cars using the auction for cars platform. So continuing to invest in our technology data capability, we believe will continue to accelerate our future growth. Just in terms of our acquisition and retention of customers, we've talked a lot about opening in new markets. We continue to do that. We believe fundamentally that's a big part of where we should be investing, growing our representations and reach in new markets. Price leadership, we fundamentally believe really does drive market outperformance. You've seen evidence of that In FY22, it continues, particularly in Q4 for us, and we believe continues into this year. Repeat customers continue to return. So that's the CRM driving customers to turn their cars a bit earlier. That would have been 41 months a few years ago. It's now 35 months. We can grow our market just by increasing the speed at which customers come back to us, even if the market is falling. Lots of product choice for customers. So unfortunately, the fleet market is still very subdued. So the days of us having a thousand of a certain car, like a Ford Fiesta, are certainly some distance away still. And fleet markets continue to be pretty short of stock. But it's good for us in terms of our uniqueness of our product is now over 70%. So lots of choice for our customers to reach and get from Motorpoint. In terms of our CRM with Marketing Cloud, so making sure our marketing decisions are way more informed and that CRM being much more intelligent about who we talk to in our customer base and when, and really driving that personalization is very important as well. Part of that is our My MotorPoint strategy where customers can self-serve. So that gives us a lot more information about customer behavior and will eventually turn into an app, hopefully next year. And that will also then really engage customers, I believe, and help to retain them going forward. but also making sure that we really understand that customer journey. So customer retention acquisition, if we understand what they're trying to do on our website, if we can then keep talking to customers, get feedback and really look to enhance that experience further, we believe combined with price leadership, we will really continue to take share. In terms of wholesale channels, so this is the Auction for Cars platform and that's been upgraded, as I mentioned, fully automated marketplace. Matt Lodge – sell your cars now fully up and running working really well, as I mentioned, no fees for customers payments made on collection. Matt Lodge – Some brilliant feedback from customers on how easy it is to use, whether it be the website or the handover process with us. Matt Lodge – And so that's very, very resonant with customers at the moment and making sure that we continue to increase that channel and 200% up last year, but we want to double it again. Matt Lodge – This year, and really grow that supply channel for us. One of the parts of that is to make sure that we can collect vehicles from customers' houses. So we've built our own in-house logistics capability to be able to launch that later this year. So we'll be collecting cars from customers' homes as well as delivering cars to customers' homes later this year. And just finally, in terms of efficiency, it's really important. We are a very well organised business, very operationally adept, we're very flexible and agile, making sure that we're also efficient and productive is a big part of what we're doing this year. We want to make sure we keep our costs, certainly our non-strategic costs, to a minimum so we can offer the best value to our customers, but making sure we've got that scale of preparation capability, really pushing that hub and spoke to be able to feed cars into some of these smaller locations we're opening, making sure our quality is high, so we've launched the QC app again, built in-house, really helping to reduce any vehicle faults that we have and improving the quality of handover to a customer. And as Chris mentioned earlier, really still pushing to move cars even faster than we do. I think we're one of the leaders in preparation speed in the country, but continuing to move that. We want to get that down even further in the coming years as well to reduce that car sitting and awaiting preparation by more. Lots of other things coming through in terms of automation, but fundamentally we want to touch the transaction with the customer as little as possible manually and do everything as much as possible in an automated way. Just in terms of outlook, I think it's really important to say really we're on the front foot. We really feel there's an opportunity for us to take share in this market and this consumer backdrop. We are a responsible organisation. We are profitable. We will remain profitable. We are cash generative. We are capitalite. We have a high return on capital employed. So we come at this from a position of strength. We fundamentally believe, as I've mentioned many times, price leadership is absolutely key. In a shrinking consumer budget scenario, we believe that customers will look a lot harder for value when they are changing their cars, the second biggest expense in a household typically. And therefore, we believe that our marketing push and also continuing to lead on price will be very attractive to consumers going forward and will help us to take share by offering the best value. making sure that we want to continue that strategic investment as Chris mentioned it's important to note that that is variable we can dial it down if we need to and that's part of being a responsible organisation ensuring we're not tying ourselves into very long-term commitments in terms of the cost base and making sure we do remain flexible and agile rolling out those new branches is a good example where we are very cap to light in rolling those out and making sure that they are structured appropriately for the opportunity that they have is important as well so we're not having too much resource in those branches and we're building the resource gradually over time as demand increases. I think all of this is against the backdrop of the past few years where some very noisy competitors have entered the space. It's our ecosystem. We know what we're doing. We are the experts. We are the market leaders on price and we will continue to grow our market share. That's our track record. We've always taken market share in difficult times and we're very confident that we're well placed to do so going forward. So that's it from me. We'll open the floor now to questions. Alex, I'm not sure whether you need to get involved or we'll just take them from the room.

No, very happy for you to start proceedings in the room, Mark. If you could just ask people to perhaps introduce themselves before they ask their question so that people on the line know who's asking. Thank you.

If you could introduce yourselves first, please.

If you have a question. Does anybody have a question?

Sanjay?

Hi, yes. Sanjay, we are here at the room. And some questions for me first one is intrigued by the slide on the. brand recognition and market share, so the most mature stores 22% customer awareness, but yes, quite dominant share I guess so interested in understanding the customer journey, I guess, people buy a car every three years or so they don't necessarily need to know a brand. So to understand how. balancing marketing between having that general brand awareness versus the tactical call to action, not either card, where do I go? How does that work?

Yeah, so there's obviously leading platforms like AutoTrader where price leadership really comes through. So we will continue to use platforms like that. But I think the key point on the awareness is that in some of the markets where we are less well known, our market shares are a lot lower. Tactical spend, so the very end of the funnel for the customer is by far and away the most expensive part to convert a customer. That can be dramatically more expensive to get that customer to buy the car from you. If you go further up the funnel, the cheaper the content becomes, the cheaper the customer inquiry becomes. So we believe building that brand, being in that consideration part of the funnel, much earlier in the customer's mindset by them being aware of MotorPoint. This is a spontaneous awareness. So once prompted, awareness is higher. but we want people to be the first thing they think about when they think about used cars is motor points so really driving that so pushing the acquisition strategy further the funnel is important and it's a lot cheaper to do it that way but then what other people's unprompted is lots of people talk about prompted awareness um so you know being very high numbers i mean i think our prompt is about 60 percent and so you know have you heard of motorpoint yes 60 people would say if you said somebody Can you name a used car retailer? Only 22% in the pre-30s would say notepad. So really driving that and prompted that we're the go-to brand in their heads about buying a used car with great value.

It's just quite interesting to understand that relationship because the 10% market share is a pretty strong number.

Yeah. It may be higher relative to... Yeah, I mean, that's an average. So we're over 20% market share where our brand, Unprompted West, is over 40%. So in some of our markets, we have more than a 20% share of the multiple

within 30 minutes. But what it does do, it highlights how important it is to keep investing in the brand. Because if we do that, then clearly this chart shows 100% that the two of us would strictly link a new Wilgro market share. So that's really, really important.

There's a second question just on how your supply channels have changed. Obviously, you've been taking more directly from consumers now, but how much other changes have been given that there isn't much you've got to include in them?

Yeah, so the fleet channel is pretty much non-existent. I mean, there's bits and bobs, but buying more at auctions through the usual sort of sellers. So the same channel as everyone else uses, there's no sort of unique channels that we access. So you are in a competitive marketplace every day when you're buying product. Buying direct from consumer obviously is a big part of that because it's just a diverse channel and lots of good product coming through on that channel. It's just less fleet, but actually some of those channels that would have normally gone through auction continue to go through auction. Obviously, BCA is the biggest auction platform in the UK, so lots of cars come through them, irrespective of who the ultimate vendor behind that car is.

And is it less direct highly interesting?

Yeah, there's less product everywhere. Much lower product supply base.

Can I just ask in terms of changes?

I know who you are, but no one else does.

I'm all excited, Matt. Stan and Shirley from Shaw Capital. Just a question in terms of the change you've made to auction for cars in terms of you talk about there's now third-party vendors coming on. How do you sort of manage their behaviour on there and the prices? And what sort of prices commitments do you make on the sell your car model? Because you're leading to price leadership in selling metal, price leadership in terms of the finance. You're making that same sort of commitment on your car?

Yes. So on auction for cars, it's very much in beta at the minute. So it's launched. We have some trusted parties using it. There's not hundreds and hundreds of cars going on there, but that will be a slower burn, I think. Lots of people are very structurally committed to where they dispose of their parts exchanges, where lots of people obviously retail out to them rather than trading them. But for those who do So we will control it through feedback from customers, basically. We will be loading on, obviously it's in beta, but we will be adding things like vendor reviews to ensure that customers of auction for cars can give scores to the vendor that they've dealt with. Obviously, we don't really touch that car. We are just the marketplace. So we never see that car, but we handle the transaction and ensure that we want to make sure that our customers get good service from those vendors. And ultimately, if they don't, act in the way that we would act and they won't be able to sell their cars then.

You just take a commission?

Yeah, a buyer's fee.

And do you provide finance for the customer?

No, it's out of our control at this time.

And then in terms of the buy your car? Yeah, so sell your car.

So we should be competitive. I mean, everybody will have a slightly different interpretation of what a car's worth at any time. We're daily amending The prices we bid, particularly if it meets our stock criteria, we may bid more than market value for that car to secure the vehicle. And if there's stuff that we or certain product where we think that's a bit risky at the moment, we may be showing a less competitive bid because we maybe don't want that car at the minute. So as an example, petrol going up to almost two pounds a litre. Mark Adams- SUVs and you know higher fuel consuming vehicles have come off pretty hard last couple of months, so we've been in pretty aggressively on those because we know we're going to get stuck with them if we're not careful. Mark Adams- And so fast if I somebody else bidding more for that product, then we would we would not be interested in winning that product at any cost we're not in sell your car to lose money. Mark Adams- we're in it to make sure that we expand our supply base, but we want to do responsibly so we're not. We're not loss leading on selling a car, but we will be around competitive. We have no policy to say we bid £500 more or £1000 more. It's a bit disingenuous to say things like that because that means technically you're paying that much more than the market value of the car.

Just one more on the marketing. In terms of disinformation you've got about brand knowledge and market shares, is that new information and is that going to lead to changing the way you spend your marketing? Is there going to be a different mix?

Yeah, certainly something we've been measuring more closely through brand surveys in recent years, trying to build a connection between market share and brand. And so as we're spending more, we want to make sure that it's paying back, that it's growing our market awareness. And in turn, you then see the market share gain. So I think making sure that if you are the price leader, people need to know you're the price leader. They have to know your brand. So yeah, we are measuring it much more closely.

Next time.

George? George from Neomis. First one is, any learning so far with the new kind of slightly smaller customer service centres on where the market share could get to? And then you can kind of see first nine months versus a traditional bigger site, how that performs. And then slightly interlinked question is, Autotrader have now got this kind of you can sell anywhere in the country service. how that's impacted your share in areas where you weren't operating and just generally how that's kind of impacting the way that the business is using those tools.

So market share where we're not within 30 minutes of customers, typically below 1%. And where we're opening in those new branches, irrespective of the size of the branch, that dramatically increases, as you can imagine. It doesn't go to probably 8% overnight when you open a smaller branch, depending, still actually has a reasonable impact on how much product you've got on the ground. So if you've only got 50 cars rather than 500, it's not quite a one in 10 sort of opportunity, but it's not as big an opportunity as it would be if you had 500 cars on the ground. Things like auto traders' ability to sell nationally is actually a very expensive, doesn't convert very well for us at least. Don't know why, but they charge quite a lot more for that service. We don't believe it works as well. as it potentially could for us, we don't see a dramatic increase in conversions of those vehicles when they're offered to a national market. I think customers do still, or a lot of customers still buy pretty locally when they're looking to buy a car, which really plays out to our needs to be closer to some of our customers and go into those markets. We know when we're in that market, we win. We take share very comfortably.

Great. On your car buying service, it's a pretty significant step up in the size of that business. What has enabled that? Is that that you're now selling four-year-old cars and actually therefore you can retail more and therefore you can bid more competitively? Is it that just you're able to price more competitively because you're more focused on it? And then what enables that to go forward? And you mentioned delivery is essentially something unlocking a bit of a friction. How does that help both this part of the vision and then also then going back to retail, how does delivery feed through that?

Yeah, so if you plan to retail a car, you can pay more for it. That's fundamental because you've got more margin in the vehicle, you've got finest attachment, hopefully, and maybe some products. I think the key thing around unlocking more of that is we want to double that this year the volumes that we do through selling car you're right in that if you retail cars sort of past that initial part exchange period so our historic part exchange ages will be over three years old some of that product falls into three to four therefore we're able to retail out of it rather than trade out to that car which is a more profitable channel for us but unlocking that ability for customers who don't want to drive to drop the car off us going and getting the vehicle from the customer, wherever that is in the country. Obviously, as we have more and more distant representation points accessing the far reaches of the country, then we'll be able to collect more vehicles rather than a customer thinking, well, I'm getting a lot less of my car, but they're a lot nearer to me for me to drop the car off. If we go to their house, we imagine that we'll increase that conversion. We've never marketed that cellular car function. We trialed it. We didn't really know what would happen. It wasn't even a thing for our business. We had to do quite a lot of technology changes, believe it or not, ridiculously, but we had to do quite a lot of technology changes to get that right. And now it's up and running. We're looking to expand it. We can dial it up or dial it down. So, you know, we're not in it to lose money on those cars. We need to make sure that they at least wash their face and we get out those cars profitably. But, you know, being careful to not commit to stuff that's really depreciating hard or getting stuff that is really good value in the market is still part of what we do. You know, we are fundamentally traders.

One on electric vehicles. You mentioned you kind of, there's initiatives in place to get the business ready for the to the changes that are coming, I guess, what are the kind of biggest challenges? What are you having to retrofit the most?

Charging points is the key one, of course. So being able to charge those vehicles and having rapid charging points is the key thing. So that infrastructure, as you know, nationally is still very poor outside of London. But within our business, we are putting those charging points in. certainly not opening branches without charging points and we have to retrofit back into the existing branch network as well and then obviously making sure that we've got the right training so customers expect us to know when they come in and it's new product to our sales people as well and so you know we make sure that we've done that training and certainly then with the preparation of those vehicles making sure that you know from a safety perspective as well as preparing the vehicle that we've got the right level of diagnostics and equipment that can interrogate the ecu and the vehicle and make sure that it's it's in good fit order. There's no gearbox to check.

So it changes the dynamics of how you power a car. But I think the point to emphasise is that our technicians now are fully trained in terms of an EV vehicle. So you get one EV vehicle out of nine petrol or diesels, they can do both. So there's no problem there. But there is more work to do, particularly as Mark says around charging. It's a big area.

Great. Last one was just sense of what you're seeing in terms of used car prices, and then also just a reminder of, as used car prices normalise at some point, just kind of the approach to trading in that environment?

Yeah, I think stock turn is always critical. In a downward market, it's more critical than an upward market. But we are seeing some cooling off of average price. It's a couple of hundred pounds a month, maybe, whereas last year it was rising at thousands sometimes within a month. So that rapid acceleration is not being matched by a rapid deceleration or depreciation. That's a good thing for the market. The last thing anybody wants is a cliff edge moment where used car values collapse 10% or something. That'd be a disaster for the whole market. I don't see that at all to likely outcome. And that's mainly, despite what is likely to be a worse consumer backdrop, new car production remains really subdued. This time last year, People were talking that by June 2022, new car production would probably be back to normal levels. Volumes are down 10% in the five months to May. So it continues to be a market, whether it's new or used, an undersupplied market, and that will continue to hold prices up, I think. So any depreciation will probably be more gradual. We're seeing a more normal depreciation curve than any sort of cliff edge. So some stuff may be down a couple of percent, other stuff is holding its value. experiment the devil is in the detail.

Thanks George. Any other questions?

Clive Black from Shaw Capital. Can you tell us what's behind that 84 MPS because that is a remarkable score. Any detail?

Yeah I think it comes down to our team really understanding what our customers want so we share all of those customer surveys with our team where we share all of the scores and with everybody across the company. Everybody in the company is paid on customer satisfaction to make sure that they understand that that is front and center what we do. I think if you've got an engaged workforce who are happy, that has a big impact on customer experience. You know, as customers come in to the store, we've all been in retail environments where people working there aren't very happy. And, you know, if you go into an environment where people are very happy, then you get a better experience.

Can I just ask, is there any differential between a retail customer and an online customer on the internet?

No, pretty online, sometimes slightly lower, but that's probably because they haven't seen the vehicle and then they're not sure what their expectations are when they pick up, but it's practically exactly the same as that.

And then we are going into quite an interesting day to be talking about finance costs with Fed potentially increasing by 75 bits tonight. What does that mean? You're a long-standing business. What does that mean for your anticipation of demand and mix in finance margins?

Yeah, I think cost of finance obviously is going up, cost of money is going up. As I said in the presentation, we want to hold our customer rates as long as possible. Clearly, we want to define gravity. That's part of the continued focus on price leadership will be that if we do get squeezed a bit on margin in the finance, we'll probably take that and try and hold the rate. And clearly, if rates keep accelerating that sort of level, then it'll be even more difficult to do. But it's the same pressure everyone else will have. others have already responded by increasing their cost to the customer. We're very conscious that we want to maintain that value to the customer and help them in what would be a very precious situation on their monthly budgets.

I guess you would expect some sort of magnitude of base rate rise in general for demand.

So we're envisaging that the market will continue to get smaller. So that means we need to be even more determined to take share to ensure that we don't shrink as that market gets smaller. So that's a big part of what we've done. We've seen that already in the past 12 months where we've grown our share despite the market shrinking and making sure that we focus on that. We absolutely think brand awareness and price leadership is the way to do that.

And just lastly,

you say a bit more about how you do demonstrate your pricing and i'm interested you know you've got slides here talking about kazoo and whatever to what extent would you go out there with billboard and say yes kazoo pays multiple yeah it's not something that we've uh we've done um but i think it's pretty obvious don't forget there's a lot of people spend a lot of time on these comparison sites like auto trader so they do have an understanding of where we are the cheapest we've we've had a big campaign our marketing campaign the past 12 months has been very much about you know searching for the best value and just get straight to motor point and but you know continuing to to do that i'm not sure whether we go straight onto the website it's very difficult to to get the right comparison for the right vehicle because every used vehicle is different it's not like a loaf of bread versus a loaf of bread it's you know different mileage different use different gearbox different engine and so it's much harder to do we think but we you know we know based on what auto traders say that we are the cheapest we have a price commitment to our customers that we will be cheaper. And if they find that somewhere else is cheaper, which they shouldn't, or if they do, then it's a £50 Amazon venture for finding something that we didn't know about.

I think it's a fair challenge if we can be more aggressive, should we be more aggressive? Because I think historically most people probably haven't. I think over the past 12 months, we've started to push that more. But going forward, we'll look at that.

The other reason I ask it is when you say you expect a shrinking market, the share has to become more important.

Very much.

How do you define that price leadership? Is it 10% cheaper? And if others start to reduce their prices, do you follow suit and maintain that essential differential or that someone is actually going to cut that up or narrow it to a 5%?

Yeah, I think we always want to be the cheapest. So, you know, like we said, we're responsible. We're not going to lose money just to gain share. We want to make sure that we remain profitable. We've got a business to run and bills to pay. So we've got to generate that gross profit. But I think, you know, we know we're the cheapest, whether it's 5%, 6%, 8%, 10%. The more it is, the better. Sometimes it's more than that. Sometimes it's less than that. So it depends on the thing with cars is if somebody's got some cars, you know, very aged, they may be forced to sell out very quickly and in a distressed fashion. So although we should still be cheaper than those cars, there may be times when other people are trading out of a bad situation and selling cars at a loss, which is harder to compete with clearly, but it's not sustainable to do that.

The question on that is how much of it is kind of algorithm-based and how much of it is judgment-based to the extent that you can work out why those cars

Yeah so we in terms of algorithms you know we know like likely run rates we know demand next week we know what cars are going to sell well we know where to put the cars we know what competitive set is we know where how are we price wise comparison against competitors on auto trader and you know we do lots of things around that competitor insight to ensure that we are the cheapest and that's it in addition to all of the anecdotal evidence that our buying and selling communities and the business are out in the marketplace finding out what's going on every day.

Okay, I think that's it. Thanks, Mark. We've had a few questions from the online audience. Could you give us any guidance as to when Edinburgh and Milton Keynes will be opening and where the third site is and when that will be opening?

Yeah, so... Is that from a competitor?

It was not, no.

Yeah. So... Right, I need to be careful that so Milton Keynes in Edinburgh will be opened sort of right about half the airtime is the expectation. Milton Keynes, there's a little bit of work that we still need to sort of flush out, but Edinburgh we've kicked off, so we'd expect to make a decent update by half year. The third site I can't, unfortunately, simply because even though we've secured the site and we've been to leases all in place, there's some negotiation with the workforce, so it'd be a bit unfair for us to do that, but we hope by the end of June we can announce where it is for the big drumroll.

Great. Thank you. On gross profit per car development, how happy are you with that figure and how will car price fluctuations affect that gross profit per car figure?

Well, it's gone up, so we're very happy with it. But making sure that that is sustainable is the next thing. So as I mentioned already, potentially we come under pressure from things like a finance commission if values come down, the actual Monetary may come down slightly, but we don't see that going back to last year's levels this year. But as prices come down gradually, then the finance commission that you get on that vehicle will go down. But the actual margin in the car probably won't go down that much.

Thank you. You've talked a lot about the increase in investment in digital, obviously. How does that relate people-wise? How many more people are focused on that? And how hard is it to access that sort of talent?

Yeah, so we probably had a marketing and technology team of about 10 two years ago, and it's probably now people at our disposal numbering more like 50 or 60. Now, that includes nearshore development partners. That includes... James Gunnery, Contractors working with us locally or remotely and so dramatically scale up that capability, and I think the other part is that the. James Gunnery, The ability to find those people is is clearly as hard and everybody says it's hard actually once people find out about the culture that we have in a business and actually quite interested to work for us, I think, also. In this segment we're with we're suddenly used cars is quite sexy and being being technology driven and lots of marketing investment going in building a brand. You know, with a business that's being aggressive to grow and that attracts people in any in any environment in any workplace situation.

Thank you i'm on auction for cars or sell through rates for your own stock materially higher than third party vendors and could this deter vendors versus independent auctions perhaps.

So obviously, we're the primary seller on there still. But no, their cars sell at a similar timeframe to what ours would. So we don't believe that that will deter. Clearly, we're also keen to grow the amount of customers on auction for cars who will be there and then able to bid on our stock, Motorpoint stock. or third party vendors, but we are treating it, the auction for cars team run separately to Motorpoint and they are very much, you know, Motorpoint is one of our customers, it's a big customer, but we're also making sure that we're very fair to third parties to not over promote Motorpoint cars in there, which is important if it's going to be a marketplace.

Thank you. And is the stock turn, the lower stock turn because of more SKUs or, you know, just what's driving that lower figure?

It is partly more skew. So if you've got a thousand of something, then there's not a natural demand typically for a thousand Fiestas over a 30 day period in the UK. So that should help a little bit. We want to shrink that even further. Frankly, we still believe that there's room to go in there, particularly in a depreciating market. That's something we're very good at, not suffering depreciation on the cars by moving them quickly before the depreciation of the vehicle really bites. So it is a little bit of skew. It's also a bit of price and also focusing on preparation speed.

Perfect. That's it for questions, Mark. So back to you for any closing comments.

Great. So listen, thanks very much for listening. We've got a big journey ahead of us in terms of continuing to invest in building our brand, focusing on price leadership, opening our branches into new markets. We fundamentally believe that's absolutely the right thing to do. In what is likely to be a more difficult macro situation, we believe we have all the elements to be very successful going forward, as we have done for the past 24 years. So thanks very much for listening, and we'll speak to you all soon.