the times | Monday February 21 2022 V2 35
Business
Robert Lea Industrial Editor
Britain’s motor dealers will together
post record annual profits of up to
£1 billion in the coming financial
reporting season but are refusing to
return hundreds of millions of pounds
in taxpayer handouts which got them
through the pandemic.
An investigation by The Times
reveals that increasing margins from
galloping car price inflation and staff
cost-cutting will propel almost all large
motor retailers to best-ever profits in
2021, and in some cases all-time records
by a wide margin.
However, not one new and used car
dealer has repaid the huge sums doled
out by the Treasury in furlough
payments from its job retention scheme
and business rates relief which kept
them trading during lockdowns.
Instead, now trading strongly out of
the pandemic crisis, the dealers will
start making dividend payments to
their investors and begin paying bonus-
es to directors and management.
That the big supermarkets and many
other retailers returned their furlough
while the motor trade has not, is likely
to excite the interest of the House of
Commons’ public accounts committee.
Its chairwoman, Dame Meg Hillier,
has previously criticised the govern-
ment for not making it a condition that
companies cannot start handing out
money in dividends and bonuses until
taxpayer money was returned.
Pendragon, Lookers and Vertu will
report record profits for 2021, together
totalling £230 million. All have sig-
nalled they will be paying final divi-
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6,500Sir Martin Sorrell has highlighted the
poor performance of his S4 Capital on
the London Stock Exchange by
admitting he is considering listing the
business he founded and of which he is
executive chairman in New York.
The advertising tycoon and former
WPP boss said that if the company was
also listed on Wall Street “we would
probably get a better valuation.” Writ-
Sorrell considers New York listing for ‘better valuation’ of S4 Capital
Jessica Newman ing in The Times today, Sorrell says:
“When we started S4 Capital in 2016, I
did look at the US market and Spacs,
but the entry costs then were too
expensive — although it’s gone the
other way now, given the oversupply.”
He added that a New York listing of
the S4 Capital advertising and market-
ing services business is “something
we’re looking at again; if we were also
listed in the US we would probably get
a better valuation there.” The shares
closed on Friday at 478½p, valuing the
company at £2.8 billion. The share price
has nearly halved from a peak of 870p
in September.
Last year Sorrell indicated that
S4 Capital would probably accelerate
plans to list its shares in the US, where,
he believes “tech companies are valued
more highly”.
He also criticised the government’s
plans to toughen reporting standards
for thousands of big private and Aim-listed companies. The US boasts more
high-growth, high-return technology
stocks, whereas London, which Sorrell
says “has a systemic problem with
growth”, is home to old-world “value”
companies like banks and miners.
Softbank, the Japanese conglomer-
ate, has indicated it planned to list the
British microchip company Arm in
New York. The plan to snub London is
expected to pile pressure on London
Stock Exchange Group, the owner ofthe exchange, after a bruising year in
which its shares have fallen by almost
28 per cent.
Sorrell has bulked up S4 Capital
through dozens of takeovers in the past
few years. Last year it bought Zemoga,
an American technology agency that
helps its clients, who include Sony,
Bridgestone and Roku, to sell more of
their goods and services online.
Companies must focus on growth, not
paying dividends, page 45Big dealerships set for record £1 billion profits
Car dealers
won’t repay
Covid cash
dends. Together the three companies
took furlough money and business rate
support totalling £137 million.
During the pandemic the three com-
panies also laid off 3,650 staff.
The taxpayer helped the Marshall
family which majority owns the listed
Marshall Motor Holdings with £30 mil-
lion of support in 2020. The money re-
mains unrepaid and the family has sub-
sequently taken advantage of a rising
share price and sold its stake in the
company for more than £200 million.
Of the largest privately-owned com-
panies, family-controlled Arnold Clark
took £75 million in support in a year in
which it reported profits of £156 million
and paid its boss £3 million.
In 2020 Sytner received £45 million
of furlough money, a year in which it
posted profits of £100 million, reduced
its workforce by 1,000 people and paid
a £50 million dividend to its American
parent company.
Constellation Automotive, the
Cinch, webuyanycar.com and British
Car Auctions group, which is owned by
private equity, has not returned the
£35 million it took.
The motor trade made bumper
profits last year from a shortage of cars
coming onto market at a time of pent-
up demand from consumers.
New car prices rose at a rate of 15 per
cent, used car prices were up 29 per cent
and some nearly-new cars now change
hands for more than new ones.
All the major listed companies’
shares are trading at about double
where they were before the pandemic.
Dealerships steer clear of returning
taxpayer support, pages 36-37ALAMY/LOTUSLotus plans flotation to drive growth
Robert LeaLotus, one of the great survivors of
what is left of the British motoring
industry, is planning a multibillion-
pound flotation as the Norfolk sports
car manufacturer moves to open a
production plant in China and targets
ambitious annual sales of 100,000 by
the end of the decade.
Geely, the Chinese automotive giant
that controls Lotus, has started an
international roadshow for investors
and wealthy customers which could
lead to an initial public offering,
probably in Shanghai, as early as next
year. However, floating the business in
New York or London is understood not
to have been ruled out.
The company is speaking to prospec-tive investors as it details its plans to
transform from a niche, chronically
lossmaking British marque into a
premium carmaker, moving from its
historic core of building sports cars
loved by enthusiasts to a mainstream
“lifestyle” motoring brand.
That plan will see it open a manufac-
turing plant in Wuhan next year that
will begin building the first ever Lotus
4x4, an all-electric sports utility
vehicle, followed by a zero-emission ex-
ecutive car. These will be aimed at the
burgeoning Chinese electric market
but also exported to Lotus’s traditional
markets of Britain, Japan and the US
Last year Lotus built only 1,700 cars
at its factory on a former airfield at
Hethel in the Norfolk countryside.
The aim is that by 2028, Hethel willbe transformed into a modern plant
producing 10,000 sports cars a year.
The Wuhan factory is to be geared up to
produce 90,000 SUVs and executive
cars a year over the same period.
Geely remains the dominant share-
holder in Volvo Cars, floated last
autumn and valued on the stock market
at £15 billion.
It took control of Lotus in 2017 and
immediately pledged £1.5 billion to
shake up the company, turn it into an
all-electric carmaker and stretch the
brand into upmarket “lifestyle vehicles”
in a sector dominated by premium
German brands such as BMW, Audi
and Mercedes-Benz.
Matt Windle, managing director of
Lotus, said: “We now aim to become a
global force.”Lotus made a splash last year with its £1.5 million all-electric Evija hypercar which is aimed at showcasing its ambitions