Car dealership Lookers promotes finance chief following profit warnings

Struggling car dealership business Lookers attempted to put two profit warnings behind it as the company unveiled a new chief executive.

Current finance chief Mark Raban takes the top job, and Cameron Wade becomes chief operating officer following the departures of their predecessors in November.

Former boss Andy Bruce quit three months ago after 19 years with the company following a difficult year that saw customers put off making big purchases.

Mr Raban said: “Lookers is a great business which is well positioned to take advantage of the many emerging opportunities across the sector.”

The company declined to say what his pay would be, but Mr Bruce took home £930,000 in 2018, according to Lookers’ annual report.

This included a salary of £368,000 and a 20% pension contribution of £74,000.

Lookers said the details of Mr Raban’s pay will be in the latest annual report due to be published in April.

Several businesses have been criticised for paying huge pension contributions to executives that far exceed the employer contributions made to other staff.

The appointment comes as the company said profits remain in line with expectations, although it admitted the three months to December 31 had been challenging.

Lookers added that the UK car market has shrunk for the third year in a row, with new registrations down 2.4% to 2.3 million units in 2019.

In the final three months of the year, new car sales fell 6.6% – faster than the 3.2% fall in the third quarter – compared to a year ago, and faster than the entire UK market, which fell 1.6%.

New car demand slump
New car demand slump

Bosses said part of the fall was due to “a tactical reduction” in less profitable fleets.

They added “further training and assessment in the sale of regulated products during November and December” also impacted sales.

There was better news in the used car market, with like-for-like sales up 3.8% in the period, along with flat gross profit in its aftersales division.

Back in November, following the profit warning, the company said it would close 15 sites as bosses try to cut costs.

On Wednesday, Lookers said four sites have been sold, banking £8.3 million for the company, with the remaining locations due to close later this year.

Investors reacted positively to the news, with shares up 2.3p, or 4.3%, at 56.9p – although shares remain down by 50% since this time last year.

The news comes as the latest data from the Society of Motor Manufacturers and Traders (SMMT) showed demand for new cars fell by 7.3% last month.

Some 11,700 fewer cars new were registered in January than during the same month in 2019, it added, with a 13.9% drop in demand from private consumers.