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.”