Vertu Motors, which operates 192 car sales and aftersales outlets across the country, has released a trading update for the five-month period ending 31 July 2024, revealing a mixed performance across its various business segments.

The group’s used vehicle division has emerged as a bright spot, with like-for-like volume growth of 5.0% and an improved gross margin of 7.2%.

This strong performance is attributed to stable used vehicle values in the UK, underpinned by increasingly constrained supply. The robustness of the used car market is expected to contribute to an improved performance in the second half of the financial year.

In contrast, new retail vehicle sales volumes for the group declined by 5.8% during the period. However, this figure represents a significant outperformance of the broader UK market, which experienced a more substantial 12.1% decline as customers hold off on new vehicle purchases amid confusion around electric vehicle policies.

The new vehicle market has seen a shift towards the fleet channel, including Motability sales, which grew by 19.3% in the UK.

Aftersales operations have delivered a robust performance, with revenue and gross profit growth, as customers chose Vertu for services, not just sales.

Vertu Motors anticipates that its first-half profits will be lower than the previous year’s levels, as expected, and full-year FY25 adjusted profit before tax will be broadly in line with current market consensus.

Performance is expected to improve in the second half of the year.

”I am pleased with the Group’s performance against a fast-shifting market backdrop. Our high margin, resilient aftersales business continues to thrive aided by higher technician numbers and strong execution of the Group’s vehicle health check process,” said Robert Forrester, Chief Executive of Vertu Motors.

“The retail new car market remains weaker as the Government’s regulation to transition to battery electric vehicles causes market volatility and negative impacts. 

“The current dislocation in the market presents opportunities for Vertu Motors to capitalise on, assessed using strict investment return metrics, with our strong balance sheet providing financial flexibility, an excellent portfolio of strong brands, robust and scalable systems, and a strong and experienced leadership team with motivated colleagues.”

Rupert Murdoch’s REA Group is interested in bidding for Rightmove, the UK’s leading property portal.

In a move that would be a real kick in the teeth for London’s equity market and the British property landscape, Australian real estate media giant REA Group has announced it is considering a takeover bid for Rightmove.

REA Group, owned by Rupert Murdoch, has confirmed it is weighing up a possible cash and share offer for the entire issued and to-be-issued share capital of Rightmove. However, it notes that no formal discussions have taken place between the two companies, and REA Group has not yet approached Rightmove regarding any potential offer.

Nonetheless, Rightmove shares were over 23% higher in very early trade on Monday.

If Rightmove were to leave London’s stock market, it would follow in the footsteps of peer OnTheMarket, who accepted a £100m bid from US property information company CoStar in 2023.

Used by millions, Rightmove has built a deep moat and is one of the UK’s most widely visited websites and the leading property portal. Searching on Rightmove is synonymous with entering and moving up the UK property ladder.

REA Group views this potential merger as a transformational opportunity to create a global and diversified digital property company with market-leading positions in both Australia and the UK.

The potential takeover bid taps into the British public’s long-standing obsession with property. For decades, homeownership has been a cornerstone of British culture, with property often seen as both a home and an investment.

If London’s equity markets cannot support companies so deeply entrenched in the UK’s obsession with property by providing the right environment to fend off overseas bids, we are truly in dire straits.

REA Group believes that the enlarged group would represent an attractive investment opportunity for shareholders of both companies.

We will have to wait and see if Rightmove’s board and shareholders agree.

As per UK takeover rules, REA Group must announce a firm intention to make an offer or declare it does not intend to make an offer by 5.00 p.m. on 30 September 2024. This deadline may only be extended with the consent of the Takeover Panel.

The FTSE 100 neared all-time highs on Friday as London’s leading index once again demonstrated its prowess as a safe-have equity index—if such an equity index exists.

London’s weighting towards commodities and defensive sectors has enabled the FTSE 100 to grind higher this week during the furore surrounding Nvidia’s earnings. It is now less than 1% from all-time highs.

“The FTSE 100 creeps ever closer to its all-time high, after opening 0.3% higher in early trading,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“It’s a stark reminder that panicking doesn’t do investors any favours, after the global sell-off earlier in the month has largely been brushed aside. Expect to see some drifting on the margin, but there won’t be too many catalysts to move markets today, meaning there’s every chance this could be the third week of gains in a row for the UK’s largest index.”

China-focused stocks helped support the index on Friday, with miners and Asia-focused financials ticking nicely higher.

“This followed reports of reform in the Chinese mortgage market, which helped lift shares in the world’s second largest economy,” said AJ Bell investment director, Russ Mould. 

However, it was the UK property sector doing the heavy lifting as we headed into the weekend, with LondonMetric, Vistry, and Land Securities doing the heavy lifting. The latest Nationwide House Price Index showed average house prices have increased 2.4% over the past year, and the Bank of England announced mortgage approvals are at the highest level since 2022.

“In the UK, house prices rose at their fastest pace since the end of 2022 on a year-on-year basis but were down month-on-month to hint at the continuing pressures on purchasers from higher mortgage costs, Mould explained.

“The property market could get a renewed boost if the Bank of England opts to follow up its August interest rate cut with another reduction next month. Core PCE inflation data, the Federal Reserve’s preferred measure of prices, could offer some clues around the likely trajectory of rates across the Atlantic when it is released later today.”