AUTO, MOTR, VTU: Auto dealers' stocks you must check out

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AUTO, MOTR, VTU: Auto dealers' stocks you must check out

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 AUTO, MOTR, VTU: Auto dealers' stocks you must check out
Image source: Piyawat Nandeenopparit, Shutterstock

Highlights

  • New car sales in the UK declined by over 20% in May as the auto industry continues to struggle with the shortage in supply of components.
  • This was the second-worst May in three decades in terms of new car sales.

Even as the demand for new cars grows, the shortage of parts across the globe continues to hit the industry. In the UK, new car sales in May plummeted by over 20% due to the shortage in supply, as per the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

The numbers released by the trade association indicate the second weakest May in three decades after the 2020 pandemic-hit market. During the month, new car registrations in the UK dropped to 124,394 units, 20.6% lower than the same period last year.

On a year-to-date (YTD) basis, the supply chain challenge has resulted in an overall market decline of 8.7%, which is equivalent to 62,724 units. SMMT also said the market is 32.3% below the pre-pandemic levels of 2019 despite strong order books.

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Image description: New car sales in the UK declined by over 20% in May

Meanwhile, battery electric vehicle (BEVs) registration rose by 17.7%. One in eight new cars that joined the road in May was an electric vehicle, according to the association. EVs represent 12.6% of total registrations in May as manufacturers work hard to sustain the progress towards the decarbonisation of road transport in the UK, SMMT said.

Let us now check out some FTSE-listed auto dealers' stocks and analyse their investment prospects.

Auto Trader Group Plc (LON: AUTO)

Auto Trader group is an online retailer that deals in new and used cars. The company claims to get over 50 million cross-platform visits on a monthly basis. It is listed on the blue-chip FTSE 100 index. For the year ended 31 March 2022, its revenue went up 65% to £432.7 million, and the operating profit increased by 88% to £303.6 million over the previous year.

As of 6 June 2022, Auto Trader Group holds a market capitalisation of £5,534.12 million. Its shares were trading at GBX 587.70, up 0.15% at 12:09 pm GMT+1 on Monday. In the last one year, the share value has appreciated by 5.70%, while the YTD return is -20.59%.

Motorpoint Group Plc (LON: MOTR)

Motorpoint is an independent vehicle retailer and primarily sells new and used vehicles through its physical and online stores.

Shares of the company were trading 3.88% lower at GBX 223.00 at 11:40 am GMT+1 on 6 June, with a market cap of £209.24 million. Over the last one year, the share value has decreased by -21.75%. On a YTD basis, it has plunged by 36.29%.

Vertu Motors Plc (LON: VTU)

The automotive retailer deals in new and used cars, motorcycles, vans, and commercial vehicles and has a network of 160 sales and aftersales outlets. The company posted revenue of £3,615.1 million for the year to 28 February 2022, with an adjusted profit before tax of £80.7 million.

The FTSE AIM All-Share constituent has a market capitalisation of £209.78 million at present, and its share price was hovering at GBX 57.96 at 12:05 pm GMT+1 on 6 June 2022. In the last one year, the stock has given a return of 26% to the investors.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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