Motability have got itself on the front page of The Daily Telegraph again today, this time the headline reads “Motability boss’s pay soars to £924,000”.
That’s outrageous for a monopoly. However, his pay wouldn’t have ‘soared’ if they were doing badly which, of course, they aren’t.
As with all annual reports, the devil is in the detail. I haven’t had the time (or inclination) to plough through it all, but some important points to consider are;
They made a paper loss in the first half year, but a profit in the second half, so they are now back in profit.
As with the previous year, I strongly suspect that these paper losses are mostly attributable to asset write downs, given that residual values have now eased after the highs generated through the pandemic (when new car supply was low). Their ongoing business operation will still be cash generative as they make a profit on every lease.
It’s important to keep in mind that any bottom line figure is after they have paid for all the gold plated salaries, bonuses and benefits of all their staff (not just the CEO). Again, they have to be making a healthy profit on every lease to be able to do this.
Cash reserves remain abnormally high for a business that does not face the usual risks of companies that face competitive pressures.
In summary, nobody should be in the remotest bit concerned that Motability is in any financial difficulty, because they aren’t. Even if the government (as a result of the 2026 benefits review) changed the eligibility criteria for Motability back to those with physical disabilities only (as many seem to be calling for), and Motability was to lose the 200,000 or so extra customers that they gained when the rules changed a few years ago, they would simply go back to a scheme of around 400,000 customers. Whilst there would undoubtedly need to be some fat trimming (pretty easy to do given where they are starting from), when the scheme was last at this size (not that many years ago) they still made a handsome profit.
So, as Corporal Jones would say “Don’t panic’!