Good morning, everyone, and Welcome to Motorpoint Group PLC's Half-year Results Presentation. You will see I'm joined by Mark Carpenter, Group CEO, and Chris Morgan, CFO, who will today take us through the half-year results presentation, and then we will open up to Q&A at the end. This webinar is being recorded, and to that end, Mark, I will hit record. You'll hear an automated voice, and then please take that as your cue to start.
Thanks, Alex. Good morning, everybody, and welcome to our half-year results for our financial year to the 31st of March 2025. We've had a very strong trading period, so we're going to give you a good update on our progress. We'll start off with a quick introduction on our progress to date in the first half. Chris will then look forward to our financial highlights and give you an ESG update, and I'll finish us off with a strategic update and our outlook. So in terms of what we've talked about in the past, about a year ago, we started our Brilliant Basics project basically to return Motorpoint to where it was performing at its highest level, and that is where we move cars quickly through the system, provide as much value as possible to our customers, and ensure that our customers are getting great service.
And I'm delighted with our progress since that 12-month period, but more particularly and more laterally, the last six months have been very strong. So a great foundation for the business, for future growth, and that is leading to a strong market share outperformance, which you can see on our KPI progression slides. I think nearly every KPI that you would care about in the business has performed very strongly in the half, starting with, of course, the only real uptick we have from an external perspective of how we're performing, which is what is our market share. And in the quarter to September, so July, August, September 2024, our share has really accelerated from 2% last year to 2.5% this year. So that is off the back of very strong growth in our volumes.
As you can see, that really comes through then into the units sold at 17% to over 30,000, and our total units sold at 10% to 43,000. The reason the total is lower than the retail is because the trade, the Auction4C ars business, we've been selling more of our part exchanges than we did historically as we've extended our age criteria out. That will now narrow back down, excuse me, as the 0-2 market becomes stronger with supply increasing. One of the key things around Brilliant Basics, as I mentioned, is about stock turn. So breaking that down into what is taking time in the business, excuse me, to get cars from the point of ordering through to the customer's hands and getting the cash back in the tin.
So that has improved from 47 days to 41 days, and that's been a real focus of ours. I think that's as fast as we've been in the past, and obviously we believe is industry-leading stock turn. What that leads to with the volume growth is a big improvement. Obviously, last year was a tough year for us. We lost GBP 4.7 million in the first half, and I'm delighted that we've returned to profitability, and that's a GBP 6.7 million improvement to a profitability of GBP 2 million in the first half. In terms of efficiencies and cost efficiencies, we're obviously looking at our cost base to make sure we can be as lean as we can be. That is very important for us because we believe that if we can be as lean as possible, then we can pass on those savings to the customer and still make a good return.
I'm delighted also that our efficiency in marketing has improved with our acquisition cost down 25% year- over- year. That hasn't affected the demand because our orders from our digital leads, so website-generated orders, have increased 16%, and as you can see, our website sessions, so our share of voice, if you like, has gone up as well by 24%. Net cash remains similar year on year, and we have seen a little dip in our customer NPS, and that is partly caused by some of these older vehicles. They are more difficult. They take longer to prepare, and I think for some of our customers who bought previously, maybe buying a five-year-old or a six-year-old vehicle, it has a different quality standard to some of the newer products, and therefore we've got a little bit of a journey to go on there. Not concerned by that.
I think anything around 80 is very good, and obviously we'll continue to work very hard to get that back to around the 80 mark. So turning to a bit more detail now, in terms of our Brilliant Basics, it really gives us the foundations for future growth. So I mentioned the strong market share performance. What is great there is our new customers. In particular, we've created a lot of new customers in the period. So every month since January, we've been growing our new customer acquisition levels, which is superb. And also in the second half of the year, our returning customers have also started to come back in big numbers as our price position and competitiveness has improved. We've maintained a flexible approach to financing, so we've had various different offers through the period on different products.
At one point, we were offering a 9.9 APR on people who were purchasing higher value vehicles to lower their monthly payments. Right now, we're at a 10.9 APR, which has been reduced from a 12.9 APR in recent months. I'll talk a little bit more about finance given the ruling in the Court of Appeal also shortly. But in terms of that stock, which is obviously the most important part, the product we sell, that is a much better mix. A lot more variety. We've lowered some of the average price points and also made sure that we are communicating our price difference to customers by offering a Double the Difference price guarantee. We haven't actually paid out on that because we are the cheapest, but it certainly gives customers some reassurance that when we say that we are the cheapest, we mean it.
In terms of our digital capability, we continue to make further improvements to our website. We believe our website is now one of the best in the market. We've come an awful long way in the last two years since we appointed our Chief Digital Officer, and that will continue going forward. We're now rated number one by Google in terms of speed and responsiveness, and that has led to a higher ranking and obviously greater domain authority, and also that contributes to our website sessions increasing 24% year on year. We know that most customers visit the website before purchase, and actually even customers who come on to our physical displays, a lot of them have even spoken to us before they make that journey, whether it be by phone or email or live chat.
In terms of our marketing, we focused a lot more on our digital marketing, so the performance marketing. So using Google Search, we're in the beta for the display advertising on Google and their shop offering, and that has helped to contribute to lowering our acquisition cost down by 26% per unit. We talk a lot about metal margin. It's obviously one of the most important things. This time last year, we just suffered a big correction in used car values. I'm delighted to say we're in a really good position on that. We've been very consistent with our margin generation through the period. We're in a very strong position also in terms of the total stock going into the busy period post-Christmas.
We have been very happy with the levels of stock we're currently carrying and giving us good visibility of a very strong Q4 performance in the January to March period, which is our most profitable period. So in terms of how we are making that improvement, we are continuing to use a lot more data to inform our buying, but also our pricing decisions. So a lot of analysis around what can we pay for this vehicle, what will it be sold for, how long do we think it will take to sell, and therefore we can predict quite quickly what our margin profile is going to be.
We did introduce an administration fee around a year ago to compensate for the issue with the fall in values of used cars to offset some of the margin erosion, and we've now removed that and rolled it back into a more consistent vehicle price for customers. So we're not having a conversation around an administration fee being added on to the purchase price, but we've managed to maintain the margin at the higher level. In terms of where we have slower-moving vehicles, we are now a lot more agile in terms of being able to promote vehicles much more individually and more quickly. So a very fast-to-market marketing solution where we see there's potentially an issue growing, even with a certain car or a certain color or a certain make and model, we will be on that quickly and promoting that vehicle more dynamically in the marketing environment.
We have also reduced our exposure to more expensive vehicles, so our heartland really remains sort of GBP 5,000-GBP 35,000 vehicles. Sometimes we will stock a couple of the older ones. EVs have been a problem in the past because they are typically sometimes above that level, and those EVs above those sort of amounts of GBP 35,000, they are the ones where there's a lot of volatility, and they tend to be the ones that we will stay away from. So broadly, where there's a slight premium for an EV versus a petrol or diesel product equivalent, then they are the ones that will sell quite quickly, and we've got a lot of confidence with that EV used car market.
In terms of our cost base, I mentioned it's very important for us to keep our costs under control to ensure we can be the lowest cost competitor in our field. We do continue to exercise that cost control. We did take the headcount down quite a lot last year. We've increased it slightly this year to satisfy the increased demand, but almost all of those roles are only required where there's volume increases to cope with the additional pressure that the increased demand will bring, and important to say also, we've got some tailwinds coming from energy costs as the price of fuel comes down. We expect to generate further savings in H2 too.
Just quickly also, the highlight on the right-hand side there, the profitability and cash generation during the period. We completed a GBP 5 million share buyback, and also we will commence our store openings next month with the opening of Norwich in December. In terms of a bit more analysis on the KPI progression, we showed these graphs last year, and I think they were quite well received with investors, and you can see how our year-on-year sales growth has accelerated through the period. If we can stay at between 25% and 30%, I'd be delighted, but obviously as we track, particularly from January, we expect that year-on-year growth to fall slightly, but we are targeting double-digit growth going forward, and that's what we want to achieve as a standard. Excuse me.
In terms of days in stock, the relationship we've explained before, but as days in stock comes down, margin rises, and also it remains consistently higher where we can keep the days in stock lower. So we are focused on that. Days in stock does rise this time of year as we stock up for a busy period coming post-Christmas, but sales at this time of year do tend to fall away. So there is a bit of seasonality in it, but broadly, that trend does persist that we will be a more stable margin if we keep our days in stock low. So that's a key metric for us to make sure that we look after. On the right side, you can see some highlights.
Brilliant Basics, about a year ago now, really led our recovery, but that data use in terms of pricing actually helped to offset the lower finance commission. So even though the APRs are running higher during the period, we were receiving less in commission because the cost of money was obviously higher. And obviously, our stock management, making sure that that leads to lower days in stock, has both contributed to our stronger market share growth in Q2. Just an example here of some improvements in the website. So one of the things that we're always focused on is when a customer is on the website, how do we make that easy for the customer to continue their journey, whether they decide to visit us in store or pick up the phone or email us?
We've introduced a new feature which gives the customer, when they're browsing, they can shortlist the vehicles they're looking at. If they then call us or email us or walk into a store, our sales team can pick up that lead using the reference provided by the customer. On our sales system, as well as the website, we can recreate that journey for the customer and talk explicitly to the customer about the vehicles they've been looking at. At that point when you come into a store and you have to start re-explaining yourself what your journey is, what your needs are. You can say, "These are the four cars I was looking at.
Can you pull them up on your system and give me the cost change and the monthly payments on these four vehicles?" rather than telling me, "The 50 vehicles that you may have I've already selected before." So it should speed up the journey for the customer, makes it a lot more seamless, and makes sure that the customer and us are speaking the same language when the customer comes into the store or contacts us through another channel. One thing we always like to show you is the value that we can offer. So against three competitors here on every single one, the vehicles are cheaper on a monthly payment and an absolute price. And I think you can see there's some customer service elements where our Trustpilot rating of 4.6. We get some outstanding feedback.
Clearly, we do get things that go wrong as well, but it's how you react to those things so we are very pleased with our progression in the customer service part of the business. And as you can see at the top there, Auto Trader, all of our cars are highlighted as lower, great, or good price, which is the benchmark Auto Trader used for providing value to customers. In terms of coverage, I mentioned Norwich already. You can see there's still a lot of white space on that map of areas that we need to expand into. We believe we need around 30 stores. Norwich will be our 21st, so we have room to grow. Just to give you an idea, we were doing a similar volume to what we're doing today with a lot less stores.
And whilst the newer stores aren't as large as the original stores, we have a lot of capacity in the business to grow into those markets that we are operating in already. But it's also worth saying that Norwich is more like our original stores, so a bigger capacity. You can see the front right side of that picture. Norwich has a lot of pitch displays, so around 240 vehicles. It actually has preparation on site as well on the left side. And you can see there that that is much more of an older type of Motorpoint store with a bigger pitch. It will give us the ability to achieve that 10% market share that we want to achieve in every market we operate in. And we believe that we have a lot of opportunity across the country. So we have also invested just in the period.
We've purchased the original Motorpoint store in Derby, and we will expand that store to increase their pitch display as well. And that will be the showpiece store for Motorpoint going forward. And I'll hand you over to Chris, who's going to go through the financial highlights .
Okay, thank you, Mark, and morning, everybody. So we've just gone to the P&L, the profit and loss. So I'm delighted to say Brilliant Basics. Mark's already talked about it and how it's been successful and laid foundations, but that really has translated into improvements in the P&L. And that's really predicated off the retail units growth, which you can see there, 17% year on year, which is a strong performance. But actually, that was 26.8% in Q2, and actually was another 27% in October.
Now, we can't expect those sort of high 20/ 20, 30% to continue because we will start to lap comparatives. But as Mark said, we still want to be growing the business, so we can look forward to that. That does translate down to gross profits, you can see, which is up 19%. And again, this has benefited particularly from we talked about data, marketing, how we could sort of drive better, sharper pricing, how we've managed stock management. So a number of different things we've done, all of which has improved metal margin. And that's actually helped to more than offset the impact of finance commissions, which I will come on to in a second, plus the fact that we are preparing older vehicles, which tend to cost more and are more troublesome because there's a more likely likelihood of returns from customers because of problems.
So we deal with that. And as Mark said before, it's all about how you deal with problems is a really important thing. So we feel we're on the front foot with that. Just worth mentioning as well, so if we go on to OpEx, we can see a 7% increase year on year. And that's really around we can see the headcount has increased from the year-end to 710 up to 746. And that's only because of where we've had to respond to volume in various stores and obviously the prep arena where we need to satisfy customer demand. So we've been very careful about where we bring in new heads into the business, but the heads that we have brought in are absolutely necessary to satisfy the demand. So absolutely the right things to do. Just on the energy cost, Mark mentioned it as well.
We are now seeing the benefit from October where we fixed prices. So we fixed prices forward a year from October. So that is significantly lower than what it would have been 12 months ago when obviously energy prices were significantly higher and much more difficult to fix at a decent price. Again, Mark mentioned marketing costs. Those have reduced from 5.1 to 4.4. So even though we've spent less, we're certainly getting a better return from our marketing, a lot more targeted and a lot more efficient. So we're not seeing a diluted effect because we're spending less. Actually, it's the opposite. And the acquisition cost per customer, you can see has dropped around about 25%, 26%. So again, that's really strong. And we're getting a much better handle on which marketing channels work best for us.
So we'll compare that to where we were a few years ago, and Mark mentioned that the new digital director has been with us a few years now. We're getting a really good granular level of detail about where the best returns are and how we spend the marketing budget, which actually has led to lower spend. So that's a win-win, particularly if we're bringing back more customers. So that's good. Finance costs actually did reduce against the half back in 2023, and that is the stock levels. And that was around the fact that priced vehicles then were more expensive than they are now, and that's driven by both deflation and the mix, not with standing that we have seen our inventory grow in the first half of this year in line with consumer demand.
Just a bit going back to the market, the good thing, so we did see the used car market is now starting to grow, as we know, fairly modestly at the moment as that new car starts to come through. But the good thing for us and the thing that is important is that where we're seeing the most growth in that used car market is in the zero- two market. So the new cars that were starting to be produced coming out of COVID, now we're starting to see in our ecosystem, and that grew about 25% in the last quarter. And that's where we want to be. They're better for us. They're cheaper to prep, less returns, etc., easier to handle. So we can look forward to that. Okay, it'd be wrong of us not to stop there and just mention finance commission.
So this has sort of dominated the industry for probably the last four or five weeks, as we all know. Every time you pick up an article, there's something about this. So following the rulings at the end of October, the market, our lending partner, and that followed the industry trend, withdrew the 10.9% APR product and the commission that they were paying to Motorpoint. So we ran for a period of a couple of weeks, and we did change our pricing to compensate for that lack of commission. And then from the second week in November, we reverted back to that pre-existing arrangements, reset our prices back to where they were before. But obviously, in that intervening period, we worked both internally, but with the lenders in terms of what additional disclosures needed to be done for customers.
As pointed out, I believe very strongly that any future compensation is a liability of lenders, not Motorpoint. I think it's important to note as well that despite the new robust disclosures where we actually now quantify the amounts that the customer or that we get from the customer in effect as opposed to from the new finance, there's been no adverse feedback, and customers aren't kicking off about, "Well, I didn't know I was paying Motorpoint X hundred, X thousand pounds," or whatever. That's been good news, albeit we're a few weeks in, but we're confident. I think the takeaway really is that it did cause some short-term challenges because we had to go around changing our pricing, deal with the lenders, but certainly no material adverse impact on trading over the last four or five weeks, and certainly not from an FY25 profit expectation.
Look, it was a story, but we're moving on, and things were back to where we were before. We believe that that's going to move forward in a positive way. Just on the balance sheet, so no new openings, but as Mark mentioned, we've got Norwich, which should open in the next couple of weeks, which we're looking forward to. We've also expanded our Derby site, and that meant that we purchased a building at the front of the store, which is good as well because not only has it expanded the site, it also gives us much better frontage visibility as people are driving past a busy road through Derby. That will help as well. That refit is in play at the moment and should be complete in sort of mid-Q4 for us. That would be good. Assets help us sell.
We still got the land in Glasgow that we're continuing to look at. Talked about inventory. Inventory has increased since the year-end, and that reflects supply starting to come back, so again, we're feeling very positive about that, so even though inventory has increased, you can see stock days very encouragingly. It's around about the 40 mark, so we're very happy with that, and it's probably as low as we can probably get it, to be honest, without running out of too little stock for consumers and satisfying demand. Payables increased, and that's simply because of the increased use of the RCF, where we drew about GBP 105 million of the GBP 150 million at the half year, and then cash stayed about GBP 11 million from where it was a year ago and up from GBP 9.9 million, GBP 9.2 million at year-end, and also probably worth mentioning, we completed the share buyback.
That was GBP 5 million of cash out of the business. It was the right thing to do. And that was successfully completed, and we moved forward from that. From a cash perspective, so I mentioned GBP 9.2 million in March, got up to GBP 11.2 million. We've got the GBP 5 million, obviously, from the share buyback, GBP 4.7 million, rather. You can see working capital improvements and that offset lease payments, the inevitable interest cost, and a couple of million of CAPEX, which is around Derby and investment in tech and MOT bays as well for the new after-sale service. And EBITDA has returned to GBP 11.1 million. So again, pretty positive cash movement in the first half. And then finally, for me, continue to make good progress on ESG. I think we've got good momentum in the business. People are engaged around ESG measures.
But I think that's been important, particularly over the last year where Brilliant Basics. And we've had to reset the business. And sometimes things like this can take a bit of a back foot. But we've been very strong in terms of, well, no, it can't go on the back foot. We need to push forward with this. So again, I'm really pleased with progress. There's a point there about how we replace tires and how it's used for kids' playgrounds and stuff like that, which again, it's a nice thing to do, and it's the right thing to do. Energy costs, so this is consumption. This isn't around the total cost, but the consumption is down around about 11%. And also business travel is down about 10% as well. And we continue to reduce the waste in the first half, and less than 1% goes to landfill.
So again, we've got some good stats on how we recycle, replace, and what goes to landfill and continue to make some good progress. Turnover, staff turnover, I mean, it has reduced from 32% to 23-24%. 32% was too high. We accepted that, and so we worked hard. To be perfectly honest, 23%, we still want that to be lower. So we continue to work on that number, but a very good improvement nevertheless. EDI data, so we've got a full suite of this across the business, all team members, where we're allowed to. We've got the data. So again, it's the right thing to do. And we continue to do various training, whether it be around EDI and then prevention of sexual harassment, etc. So we make sure that all staff are done with that.
Me and Mark are very keen that we make sure that the teams do do the training. So we do follow up to find out if people haven't done the training, then why not? So it's not just, let's just put it out there and let people get on with it to tick a box. We make sure it really happens. We talk about it in the business as well. So that's really important. We were doing another employee survey in sort of February time, so in a couple of months, but this was from earlier this year. 95% of the team work for Motorpoint. That is a fantastic measure.
So I think we're really pleased, particularly because some of the work that we've done over the past year has been quite painful for people because we have put pressure on people in certain areas because we've had to reset, and that comes with its own challenges, but to have that statistic, I think, is really important, and 97% agreed we show respect to one another, so love it to be 100, but 97 is still a pretty good measure, so I think we're making some really good progress on the ESG side and people, and so we've got some good plans, so thank you, and I'll hand you back to Mark.
Thanks, Chris, so I'll now take us through our strategy update and outlook, and I think the term we'd like to use is that we are focused on our plans to accelerate our growth.
Making sure that we lock in the gains from this year, becoming profitable again, and getting our cost base under control, and getting the core things around unit, stock turn, and profitability really nailed down and made sure that we've got those processes to be consistent going forward after a tough couple of years. While we are cautious on the macroeconomic pressures, our supply is improving. The macro pressure is one challenge in terms of interest rates and inflation over the past couple of years, but supply has been our biggest challenge. If the cars haven't been built, then it's very difficult for us to sell those things that haven't been built. There is a shrinkage in that 0-2 market. We are looking, obviously, to expand those supply chain channels. We've gone up as old as six years old and 60,000 miles in certain products.
That is now being brought back down to four years and 40,000 miles. But I think it's important to say that where we do sell anything over that is because it's a part exchange that we've got control of, what we looked at. We've made sure the quality of the vehicle is good. And then we would maybe still be open to selling that car to provide a different price point for customers. But where we buy from third parties, the criteria for retail is four years and 40,000 miles. In terms of focusing on profitability going forward, we want to make sure that we grow our profits responsibly. We want to generate that cash. And accelerating our growth is mainly focused on expanding the supply channels. So securing more vehicles through our own channels.
That will be a part exchange and our Sell Your Car offering, which has been revised and has been expanded. We are now offering collection at home services for customers to make sure we can access those cars that previously customers would not be willing to drop into our stores. That provides a new opening for us. We have already mentioned the new store opening. There are still markets where we are not very penetrative. As an example, in Norwich, we have less than a 1% market share within 30 minutes of Norwich, even though our nearest store is probably about an hour and a half away. There are gaps in the country, as Chris mentioned, where we will be opening stores in those.
Where we've got such a low market share, we know that our target of 10% will lead to some real incremental growth going forward. We continue to use the data mentioned already, but it is becoming real part and parcel of what we do. The analysis we have internally using mostly our own data, but we do supplement that with third-party data to ensure that when we are buying and pricing our vehicles, we have a good understanding of the margin generation and the time it will take to sell that vehicle. That obviously then gives us greater consistency and stability in our pricing and our margin generation. We continue extending our brand reach, making sure that we do still advertise above the line as well as the digital. As we mentioned earlier, the digital is proving to be very effective.
We're spending more on that now than we are above the line. We still focus on technology to make sure that we can make that journey for the customers more seamless. We talked earlier about the online to offline, making the customer not realize that it doesn't feel like you're dealing with two different organizations, which sometimes it can do in companies like ours, which are omnichannel, and making sure that customers feel as valued, whether they bought in store or online, is a real focus for us and getting that NPS, our core measure, to be improved. And just a little update on something we've spoken about before in terms of after-sale. So offering MOTs and servicing to our customers is going to be trialed next year.
We are currently installing additional capacity for MOT bays and also servicing for our customers, which we will start that trial in our smaller stores to increase their footfall and the services they offer to try and mainly control the customer journey a bit better. Currently, you buy a car from Motorpoint, then go and get it serviced somewhere else. We recognize that that could be a great way of maintaining our customer loyalty and giving increased touchpoints to our customers going forward. Selling service plans and then servicing the vehicle for the customer, whether it's annually or every other year, should improve our ability to then sell those customers those cars going forward.
This is a slide we introduced last year, but I think it is a really important one because, as we said last year, where we are today is not indicative of where we will be because the business has a leveraged cost base, which, as the volumes grow, then we will be pushing those additional gross profits through to the bottom line so it's a very linear path we see from PBT now to what it will be in the future, and as we've noted, the key stepping stones to that, some of these are being improved right now, and we've got more to go on those and some of these going forward so Metal margin has improved. It's at record levels through this second half, sorry, this first half of the year, and as we sit today, we've got very strong margin. Our supply pressures are easing.
We are getting increasing inbound calls from suppliers for this younger, lower mileage vehicle, which has a lower preparation cost and lower purchase fees going forward. And our market size increasing, as Chris mentioned, most of that is in the zero to two. As those new cars come into the nearly new channel, will be the best opportunity for suppliers to sell those cars into the market. Motorpoint has always offered the best channel for them to achieve the best value for those vehicles. Obviously, as interest rates fall, there's a benefit to us because of our borrowings on the stocking plans, but equally, they will lead to hopefully a bit more commission for us from finance. That's more linked to the cost of money rather than the actual interest rate.
But you can see there there's four key stepping stones, which we've achieved some of in the first half, but we expect to continue achieving these going forward. And sitting here today, we know that we will make more money in the next couple of years, and we are today, and we expect that to be a substantial improvement in the overall profitability and subsequently the cash generation of the business. In terms of current trading and outlook, we have strong momentum continued in half to October. We're up 27%. November's tracking strongly as well. Our key challenge will be January because we were year on year. January 2024, we were substantially up on 2023. So we expect to see that rate of growth slow, but we want to target double digits, as I mentioned earlier.
We are profitable, and we continue to be profitable, and we expect that to grow in the years to come. I've mentioned already our metal margins are very strong, and Chris has taken us through our finance commissions. That is back to where it was pre-finance ruling. We have not seen any adverse impact in terms of finance attachment. The finance commission is back where it was at the same level, and the revised explicit commission disclosures to customers have not led to not even any questions from customers, let alone customers rejecting the point that Motorpoint will receive a commission for introducing the customer to a finance provider, so nothing to see in terms of that, and we don't expect, as Chris mentioned, any liability on Motorpoint going forward. In terms of the outlook, we continue to get macroeconomic pressures.
Obviously, the budget was less than helpful for our cost base, but we will absorb that. That turns into about a GBP 20-GBP 25 increase in our selling price. We more than cover the cost increase that we expect to see with the national insurance and minimum wage rises. I think the important thing for us is we can pass those costs on to our customers because used cars are always unique. There isn't a specific out price for that vehicle that other people dictate, which does happen, obviously, in some retail establishments. We expect to see moderate reductions in interest rates, which should boost demand going forward, and as we already mentioned, we expect to see the supply of nearly new vehicles to continue to increase.
So in summary, I think the improving market conditions and the lower interest rate environment should improve the macro conditions for us specifically. But our implementation of Brilliant Basics has meant that we really look forward to the future with a strong, profitable growth and with a lot of confidence. So we're feeling really good. Alex, hand back to you.
Many thanks, gentlemen. For those in the audience, if you'd like to ask Mark and Chris a question, if you could please raise your virtual hand, I can then do the honors this end. Our first question comes from Alison Leyshon, Deutsche Numis. Alison, if you take yourself off mute.
Thank you. Thanks, guys, for that presentation. It was really helpful.
Actually answered a lot of my questions as you went through there, but a few areas I guess I'd be keen to hear you talk a little bit more about. So firstly, just on that ambition to move towards 30 stores, just in terms of how we should be thinking about the sort of progress of pace towards that. My second question would be around you're obviously seeing really strong growth in website traffic. You've made a lot of improvements to your site, but just wondering if you've got any indication from your side in terms of how much of that is driven by the improvements you've made versus how much of that is kind of consumer coming back, consumer interest in buying a new car, and tied into kind of, I guess, how you're thinking about that going forward. And then the last one is really on cash allocation.
So you've completed the buyback. Cash conversion of the businesses is strong. And I take from your messaging that you're being disciplined with investment here. So just wondering how we should be thinking about your priorities on cash allocation as we look forward. Thank you.
Okay. So on new stores, so in the past, we've done one a year or none a year, and then sometimes we've done four a year. So I think it is very much dependent on the availability of the right store in the right locations, whether that's a piece of land or an existing building that can be converted into a Motorpoint store. So I'd say the only real constraint on us is the opportunity in terms of the land or the building being available. If we had three today, we could do three.
As you know, that would potentially require capital for us to use. That's what the RCF is there for. We would do the work and then sell and lease the building back. So it doesn't have a medium-term even pull on cash. So that's an important thing that we can grow without using the cash to grow. So the only constraint on profitability with new stores is that they do lose money in the first year. So that potentially is the only thing to consider. And I think we've said in the past around GBP 1 million of drag, if you like, on new store opening. So I would say we'd like to do a minimum of one per year, but it could be three. It could be four in any year.
We're not going to push too hard because I think then you make the wrong decisions and you open in the wrong markets. But we are looking aggressively at securing new stores right now. Second question was, what was the second one?
Well, that's what the third one was arou nd.
Yeah, the website was the second one.
Oh, the website, yeah.
So I think if you look, we are tracking well above as our share gains, market share gains show, then clearly that is outperforming the market. So the site becomes more and more easy to use, and I think customers come to that more as well. But as we mentioned, the digital marketing, that drives customers more to the website, whereas above the line potentially wouldn't necessarily push it as much through.
Using the digital channels more heavily does sort of overpush, if you like, customers into that website funnel for us because we know that that's where most people start their research journey. And we think when you go on the Motorpoint website and see the prices, and even if you then flick to a competitor or an aggregator like Auto Trader, you will notice how competitive Motorpoint's prices are. So I think it's probably a little bit of both, a bit of website optimization. We're working hard to continue that, of course, but also the digital marketing pushes more website traffic through also. In terms of cash utilization, we talked about being responsible and profitable going forward. So I think that will generate the cash that we want to generate.
I think if we think back to pre-COVID, Motorpoint was generating a return on capital employed of around 80%-90%. That is where we consider we can get back to. That has to be our medium-term goals. That will throw off a lot of cash. The business has always, even during expansion phases, thrown off a lot of cash because of the fact that we don't fund the property. If we do, it's only a short term before we lease it back. With that cash that we expect to generate, we will at some point return it to shareholders. If there's no further use for it in the business, I think with us being profitable, then that will be generated, and we will look to return that to shareholders either via a dividend or via a buyback.
Thank you. That's really clear and helpful.
Thanks, Alison. Our next question comes from Carl Smith at Zeus. Carl, if you could take yourself off mute and please go ahead.
Just two questions from me. First of all, it's about stock availability and how you feel about that. Obviously, it's fantastic that you're getting your stock days down, but do you feel like you've got enough stock at a lot of your sites? Are there any sort of inventory management improvements to make in terms of moving stock between sites? So that's the first question. And the second one is sort of how do you go about assessing return on investment when it comes to expanding old sites versus opening new ones? The new sites kind of take a little bit of time to become mature, so possibly you might find it better to invest in expanding old ones. Yeah, just how do you think about that?
Thank you. Okay. So through the year, stock has become more available. So we have gone into some of that older product, as we mentioned, but it's not something that we would like to do more of going forward. It is a harder market, we believe, for us in terms of the preparation. The speed to sale of the vehicle is not helpful given our model is driven by speed to sale. So that has got better through the year. We have had periods during the year where we were low on stock. As we sit here today, as I mentioned, the last couple of months has eased a lot in terms of supply. So there's a lot more volume coming into the market.
As we continue to use the data, we're able to potentially pay a bit more for product by using the data and having a better understanding of what we can sell that product for. Back, if you go back 10 years, it'll be, "I'll buy that car for 10 and sell it for 11." It doesn't work like that anymore. It's dramatically different to that with the use of data and actually can upend quite a few instinctive decisions that may have been made in the past. The data is driving more security of stock for us. I think we will hopefully continue to be able to drive that going forward and have enough stock all of the time rather than just when supply eases on a national level.
In terms of the new or expanding the sites, I think the key thing is some of our smaller sites, we are looking to expand. But some of our original, if I say the original dozen sites or 12 or so of the larger stores, they already have pretty strong market share. I don't think there's much more that we can get from them. And it's always been, unless it's running at a terminal velocity where they cannot physically spin the cars any faster, there's always a way that you can grow the sales in that store without necessarily growing the stock in that store.
So I think we believe that if you've got around 200 vehicles on display, then that is enough selection, enough showcasing of our product to, A, bring customers in, and B, provide enough choice when the customer is there to find the car that meets their needs.
Yeah. Just adding to that, Carl, let me note our priority would be getting new space down because that's where we get the obvious market share gains. I mean, at Derby, we have chosen to both sort of refit and expand, but that's partly opportunistic because, A, we purchased the freehold recently at what we believe is a good price, but also we had the opportunity to buy some land, which has really improved the site. So that's a bit of a one-off, and it is 27 years old.
But just on that basis, two of our other sort of biggest and older sites, Newport and Burnley, we've invested probably about GBP 500,000 each over the past couple of years in terms of doing some quite major refits. And that gets the store up to where we need it to be. So I think once we've done Derby, the focus will be much more, as Mark says, on getting new space and looking at some of those smaller sites for relocation, perhaps, as well.
Okay. Thank you very much.
Thanks, Carl. Our next question comes from Darren Shirley at Shore Capital. Darren, please take yourself off mute and go ahead.
Good morning, gents. Also, the questions have been asked, so sort of follow-ups on what we've heard before. But in terms of sort of the improved vehicle availability, what is actually driving that improvement?
Is it leases or any particular type of vehicle that's coming online? And one of the issues alongside just taking it into the 0-6 was sort of customer affordability. The fact that you're moving to more 0-2 impact that affordability, or does just the value you're offering continue to be compelling?
Yeah. So in terms of supply channels, it is more of what you mentioned. So the fleets have now revised their fleets. So they've refreshed the product they have. Obviously, once they've then run those vehicles for six or 12 months, that cycle feels like it's in full flow where they're able to get the new vehicles, which allows them to defleet the older vehicles. The initial defleets they carried out probably one to two years ago when they were defleeting the product. It might be 50,000, 60,000, 70,000-mile vehicles.
And once it's been on fleet that long, that's not a car that we would want to buy. So as they then refresh their fleets more frequently, the product that they are defleeting is much more within our arena. So up to 30,000, 40,000 miles maximum. And buying those vehicles from those fleets, the manufacturers, finance companies, all of those channels are now open to us, which is great to see. So it is mainly what we would have historically called the oversupply of new cars versus the natural new car demand is what's driving it. And that means the fleets can pick up newer vehicles or new vehicles, sorry, for good discounts. And that then leads to the value being created for the customer, which plays into the second question.
So once we reduce that older, higher mileage product, you're right that the absolute price point isn't there potentially, but it's all about value. So when we've got a six-year-old car, that potentially isn't as competitive a vehicle because there's a lot of those in the market. But where we've got the nearly new market, mainly we control certainly the defleets. We've controlled that market for a long time. We're able to offer the customer compelling value. So even though it might be a GBP 20,000 vehicle, the list price on that vehicle might be GBP 30,000 or GBP 35,000. And therefore, it's a great value car to somebody who's going to go and buy a new car.
They can see that a sensible person would come to Motorpoint and buy potentially a six-month or one-year-old vehicle with two or three thousand miles on the clock because it's not had much use in that since it's been registered. So I think that's the key thing. Value is always the most important thing to us. And the average selling price might even go up now slightly, but it's not going to shoot up to GBP 25,000 from where it is today, which is around GBP 16,500-GBP 17,000.
What you're basically saying is it's almost a return to sort of the pre-COVID Motorpoint model is what we'd expect them to evolve over the next 12 to 18 months.
Yeah.
Okay. And then in terms of the availability of those cars, how much is that being helped by the excess of capacity from that nearly new market?
I obviously point to Cazoo, but some of the big franchise dealerships have come out as well. Is that noticeable in terms of your purchasing?
Yeah. It certainly helps that the better capitalized players have withdrawn. I think what you do find, though, is that where they withdraw from some of those smaller facilities, somebody else will pop up in their place if they like. But you're right in that potentially that zero-two, the higher price stuff, where you need a good brand and a good reputation, that should be easier for us to recreate from where we were in the past to regain that market without the distraction of some of the other competitors. But it's a very easy low barrier to entry market to join. Getting to scale is the hard part.
But if we're in an auction and somebody's willing to pay more for that one vehicle, then potentially we would get outbid even. So it's making sure that we've got the ability to buy and sell those vehicles. And the competition will be what it will be. But you're right, there's been a lot of fallout in the market in the last 12 months with big players leaving the specific used car brands behind that they had tried to develop over the last couple of years, which I think does showcase the resilience of the Motorpoint model. So we've had probably the toughest ever set of trading circumstances in 2023 and slightly before. And now it feels like it's back to maybe still challenging trading circumstances, but we control what is within our control, and we'll be fine. And that's been demonstrated through the year with a much better performance.
And a couple more, if you don't mind. Stock turn down to 41. Is that sort of optimum? Is there more to go for there?
Yeah. It's pretty optimum, to be fair, because that includes getting the car to us, getting it prepared, putting it on sale, getting it into the hands of the customer. So that's the cradle to grave journey, if you like. So it does take a couple of days to transport customers. Increasingly, with the number of showrooms we have around the country, then more product moves between showrooms. So customers will move cars around the country. Around a third of what we sell needs moving to the customer, which obviously the customer pays for. But we'd rather have an allocation where customers have a product on their, sorry, at their local market that we can deliver.
Some people will choose a different color or a slightly lower mileage or a slightly newer plate, and they want to move the one from Glasgow down to Portsmouth or somewhere like that, which it does slow the process down for stock days. So irrespective of that, despite that, we still have an industry-leading stock turn.
And two more, if you don't mind. You've obviously repurchased the land for Derby and purchased a little bit more. Is that a one-off? And why, given the balance sheet you've got and the cash that you've got, that you still look to do sale and lease back? Would you not look to hold more of your properties and own your properties going forward?
No. The model will remain the same that we will look to sell and lease things back. So Derby, we've got control of that store.
There was a third party on the frontage of that store, which we've now purchased, and we will demolish that to open up the store to the main dual carriageway that goes past it. So that's been something we've tried to do for a long time. The owner never wanted to sell. They finally managed to twist their arm and get them to sell, which means we can demolish and dramatically improve visibility of that, as well as gain more retail display space in that market. But potentially, we will sell and lease that back when we complete the works to it. But we've got no plans to hold property on the balance sheet going forward.
Okay. And then the last one. We obviously had a very helpful budget for growth at the end of October. Have you seen any impact on demand since then at all?
No.
I think the more sort of the uncertainty is probably worse than the actual budget, I think. So when you tell people it's going to be tough, but you don't know how tough or who it affects, is a lot worse than people knowing, "Okay, that's the set of cards we've been dealt. Let's move on." So yeah, it's less than helpful, of course. But as I said in the call, we are able to pass that on to customers. I think the only potential now is that interest rates will maybe stay higher for longer than they were predicted due to what may be more inflationary pressures from the rising in wages that will undoubtedly have to be pushed through to selling prices. I can't see any other way. I'll give someone else a go. Now, thanks for that, gents.
Thanks, Darren. That's it currently for questions.
If anyone else in the audience does have a question, please raise your virtual hand. No. So Mark, back to you for any closing comments.
Yeah. Well, great. Thank you, everybody, for listening. We are, as I mentioned, on the front foot, looking to expand going forward. I think the Brilliant Basics program has really given us a fresh impetus. We feel a lot more in control of the business going forward, irrespective of any macro pressures. Motorpoint has always been a business model where we offer the best choice, value, service, and quality to our customers. And if we are a lean operating model on top of that, then it's very, very hard to compete with us with that vision. So we expect to be more successful going forward. And I think the growth ahead now will be profitable. We'll generate cash.
And we will obviously look to utilize that going forward in the manners that we set out. So hope you enjoyed the call, and thanks for listening.