Motorpoint Group PLC, the UK's leading independent omnichannel vehicle retailer, has provided a trading update for the six months ended 30 September 2023. The company reported a stronger quarter-on-quarter performance due to cost reductions and operational improvements. In response to difficult macroeconomic conditions, Motorpoint took swift action in Q1 to right-size the business and ensure cash generative trading at lower levels of group sales. This included increasing retail margins, reducing auction fees, streamlining the organizational structure, and reducing discretionary capital spend. These actions proved helpful to the company's performance in Q2.

The affordability of used vehicles has been adversely affected by high prices and increasing APR finance rates, along with continued consumer uncertainty. In response, Motorpoint has broadened its selling criteria to include vehicles up to five years old and 50,000 miles, to help customers find the right vehicle within constrained household budgets. The company anticipates that used values will gradually align to historic levels as new car supply improves, further enhancing affordability for customers.

As a result of margin improvement and cost base actions, the underlying loss before taxation of £3.1m incurred in Q1 narrowed to a small loss of approximately £0.6m in Q2. For the half year, the company made an underlying operating profit of approximately £1.6m before interest expense of £5.3m. Motorpoint also incurred a one-off exceptional charge of approximately £1.0m related to redundancy costs.

Despite the current market challenges, Motorpoint remains committed to its long-term growth aspirations. In the short term, the company is focused on margin improvement, cost base management, and cash generation. Motorpoint generated net cash from operations in H1 FY24 and ended the period with net cash of £11.0m, with further facility headroom of £35m available.

The company has continued to make targeted strategic investments, including improvements in technology for both its retail and wholesale businesses. Motorpoint opened its 20th store in Ipswich in May 2023. The company's market share of the 0-4 year old market increased to 3.4% for the 12 months to June 2023.

Motorpoint expects to announce its Interim Results on 23 November 2023. CEO Mark Carpenter stated, "We have responded by reducing our cost base and expanding our retail criteria to help customers find the car of their choice at a price they can afford. We have successfully preserved cash while making progress on selective strategic initiatives, and are well positioned to emerge from this difficult macroeconomic cycle a leaner and more agile business, ready to seize the significant opportunity as market conditions improve."