These two UK shares are due to update investors in the coming days. Should you buy them today or steer well clear?
You might be tempted to buy shares in Motorpoint Group given the recent strength in the used car motor market. Latest data from online car shopping website Auto Trader showed the average price of a pre-owned vehicle leap 7.6% in September, the highest year-on-year jump on record.
Demand for used vehicles has leapt for a couple of reasons. A fear of using public transport has prompted Britons to go car shopping during the peak of the pandemic. Difficult economic conditions have caused shoppers to switch down from buying more expensive new vehicles to cheaper, previously-owned units too. And it’s a phenomenon which has already boosted sales at Motorpoint.
In late August the retailer commented that “over the last 11 weeks, the period which the Group’s retail sites have been fully reopened, the board has seen its key operational and trading metrics comfortably ahead of the equivalent period last year.” I’m expecting another sunny statement when half-year numbers come out on Thursday, August 8. But I won’t be buying Motorpoint shares any time soon.
Why? Well recent data shows that sales of new cars are starting to slump at an alarming rate. It might take longer but I fear that the severe economic downturn facing the UK — not only due to Covid-19, but because of ongoing Brexit uncertainty and/or economically-disastrous ‘no-deal’ withdrawal from the European Union — could start to hammer sales of other big-ticket products like used cars as well.
According to the University of Buckingham, sales of used vehicles in the UK slumped to 17-year lows during the 2008/2009 global financial crisis. I fear that a period of significant sales