Car dealers not repaying furlough money despite rocketing expected profits
Car dealers are reportedly refusing to return funding provided by the government through furlough payments and business rates relief.
The sector, which is expected to collectively post profits up to £1bn, will start paying both dividends back to investors and bonuses to managers and directors, a Times investigation reported.
According to the outlet, dealership groups gave different explanations to why they would not be repay Covid support packages.
One chief executive said that furlough support was accounted for the 2020 financial period, so it had no bearings for the following year, while another added that it would be difficult for the board and shareholders to agree if no one else is paying the money back.
“The pandemic resulted in the complete closure and severe disruption to our normal business operations and trading patterns throughout much of the year and had a material impact on our financial performance,” a Lookers spokesperson told the Times when asked about why the group would not give back £45m of furlough grants.
Soaring demand levels are behind the sector’s record profits and have yet to slow down, despite supply chain issues and inflation prices, City PM reported.
According to Auto Trader figures, the average price of a second-hand car has gone up 29 per cent like-for-like compared with the same period, reaching an all time high of £20,340.
“Although inflation will always pose a potential headwind for demand, based on the positive consumer metrics we’re tracking across the retail market, as well as broader economic factors such as the falling unemployment rate and record number of job vacancies, we don’t anticipate any significant easing any time soon,” Auto Trader’s data and insights director Richard Walker said.