poor-trader

Manheim (NextGear) are extending all cars out as they come near to due and cancelling all margin payments. They also seem to be waiving audit fees. They're still charging interest which they have reduced slightly. On the whole they've been quite decent.

Remember the Government Furlough scheme only runs to 31/5/20 as it stands so, on the assumption no one will be re-opening to mid-May anyway you only really have about 2-3 weeks before you have to make the decision whether to bring people back onto the payroll or let them go anyway.

In the 2-3 weeks running up to the lockdown the £0-£2.5k ish stuff was still selling easily. Basically anything which had some MOT and vaguely worked but was cheap still seemed to be flying out the door but everything else was dead. The "distress" car market will always have demand. People who simply need another car because their existing one has been stolen/crashed/failed MOT/clutch gone/died or whatever will still have to buy one so the low level of the market will come back quickly. Add in all the people who's leased 18-plate German thing has just been re-possessed and it could be boom time. However, the "Changing my car because I fancy a new one" market might take much longer if confidence and the economy has taken a big hit. I can't see the latter coming back strongly until Corona is seen as done and dusted (vaccine or whatever) and the economy has bounced back a bit. There will always be people with money but they need to confidence to spend it.

BCA claim to still be open, still selling cars via buy-it-now and open for collection at certain times. At least that's what it says on their website.

Not sure what planet BCA are on. They seem to be in denial about the current situation. They need to be planning for neither they or any of their dealers to sell a car for at least 3 months. It doesn't matter how strong a balance sheet any dealer has if most of it is in cars and it is impossible to turn a car into cash eventually they will hit a liquidity wall on a stocking loan. I think actually dealers have the upper hand - I mean are BCA going to turn up tomorrow and collect a load of cars on Tuesday and flog them at auction on Wednesday? No, they are not. And no matter how much they may bill for the balance it could take months/years/never chasing people if they simply can't/won't pay. They must realise eventually pretty much every dealer on their books will start defaulting on the stocking loans. I'm not sure how BCA are financed but maybe their financial position isn't as strong as we assume and, in fact, they can't afford to extend the loans as they themselves are running out of money. If garages could afford to pay off their entire stocking loan in one hit without selling a car then I guess they probably wouldn't have a stocking loan. On top of that they may have a nice healthy balance sheet but if all their money is in other cars they won't have the cash. I rarely deal with BCA (thankfully, by the sound of it) but they must know how the industry works?

NextGear are extending all vehicles due to expire by 60 days. They also seem to be cancelling most/all margin payments. In fact, when I looked at my bank schedule today there are no payments showing for the next 3 months. It is taking a while to do apparently as the software isn't working as they'd hoped and staff are having to change the payment schedule for each car with each dealer manually whilst working from home. I mean, frankly, if someone doesn't/can't pay what are they going to do? Take all the cars away and do what with them? They can't sell them and they'd just make a huge loss. On top of that if they put all their dealers out of business when this is over they're out of business and Manheim has far less customers to sell to as well. So they seem to have been sensible. I have no idea what BCA are up to. They seem to still be trying to flog cars by buy-it-now style methods and are encouraging purchasers to come and collect them. No one should be collecting anything. The law is pretty clear, they should be shut.

I don't know how much Sh t will hit how many fans but I agree with you about 3 weeks. Best case scenario is that'll be the peak so best case closure is probably 6 weeks. Even then it will not be business as normal but a gradual relaxing of some rules allowing partial re-opening. Anyone who thinks this will be 3 weeks is kidding themselves but obviously I hope they turn out to be right. I suspect many restrictions will stay for the rest of the year and others will come and go as a further outbreak in the autumn is very likely if we beat this one.

Well, it seems we now know the answer on this and it is "no". As far as I can work out it is a complete ban on car sales activities including auction houses (Manheim is closing until further notice this morning, I assume BCA are as well. This will not be for 3 weeks IMO - it is for a bare minimum of 3 weeks - but I can see this being for 2-3 months or more judging by how things have gone in other countries. I genuinely wonder how much of the industry will survive this.

There is a lot of talk in the usual rumour places that closure of "non-essential retail" may well be the next step (in actual fact it is more than a rumour - it is being considered by Government today). I think we know what category car sales comes into! Could be some time as well - 1-2 months minimum. Starting off at 2 weeks but then keep extending.

Manheim and BCA must be sitting on some massive losses. Maheim own a lot of cars through their "dealer advance" system and BCA of course through WBAC. If prices tumble and/or both are forced to shut down the write downs and losses will be huge for them. In addition they'll both need to take a look at their finance arms. If sales are basically stopped then dealers simply won't have the liquidity to pay off cars on BCA or NextGear finance as they won't have sold any. A 2 months stop on all business could pretty much bring down the whole industry in my opinion. Even dealers with strong balance sheets have it mostly in stock at this time of year, not cash, and if it is simply impossible to turn cars into cash (even at losses) then they won't be making their payments.

I know Colchester has just axed the catering contract and all the staff given a couple of week's notice. I'd assumed they were just changing franchisee but maybe not!

I think it's pretty obvious where we are heading. Any dealer who isn't prepared to be shut down for 1-2 months has their head in the sand a little bit I think. Also just noticed Manheim going online only from Monday.