UK motor retailing group Vertu has said it is on course to meet full-year expectations as profits on used vehicles remain above historic levels amid a continuing shortage of cars that are less than five years old.
The group - whose outlets include the Macklin chain of dealerships in Scotland along with the Bristol Street, Carrs and Vertu brands - also highlighted a lack of symmetry in the market for electric vehicles that is forcing car manufacturers to cut prices and offer cheaper finance on battery-powered models. The recent increased supply of EVs appears to be exceeding retail demand, Vertu said, creating "an imbalance in pipeline inventory coming into the key plate change month of September."
Formed in 2006 as a consolidator in UK motor retailing, Vertu was also boosted by the £117 million acquisition of Helston Garages at the end of last year. The deal saw the group take over 28 Helston sites located in the south-west of England.
READ MORE: Electric options fail to fill the used car void
The integration of Helston remains "on track" and total group trading profit will be above that of last year, when Vertu generated a record £2 billion in revenues during the first half despite selling fewer cars than previously.
"Used car pricing has remained firm and we have gained market share in the new car market," chief executive Robert Forrester said.
He added: "The board remains optimistic for the future, we anticipate that full-year results will be in line with current market expectations, and we are excited about the opportunities our enlarged portfolio will create for Vertu Motors."
Used car volumes declined by 6.3% amid the lack of supply, while rising interest rates meant Vertu was unable to run the 0% finance offers on used vehicles that were available last year. Prices charged and gross profits remain above historic levels.
READ MORE: Canadian acquisition of motor retailer Lookers in jeopardy
Despite supply pipelinechallenges, Vertu said it had boosted inventory levels to secure future sales volumes. This was possible due to the "strong procurement capabilities of the group in the used car area", including close partnerships with its manufacturers and the benefit of part-exchanges from new car sales.
Like-for-like volume growth was achieved in new and Motability car sales as supply constraints continued to ease, aiding sales volumes. Vertu noted that while retail demand for EVs is lagging supply, fleet sector demand remains "robust".
Aftersales demand remained strong with both the vehicle repair and service operations driving revenue growth despite ongoing shortages of technical staff. Gross profit margins in service declined due to higher salary costs.
"Technician resource levels remain a constraining factor in meeting both retail demand for work and in the preparation of used vehicles for sale," Vertus said, noting that older vehicles require more preparation. "Consequently, the group has taken further pay action in July to promote the recruitment and retention of technicians and this should aid further growth."
READ MORE: Vertu off to a fast start amid resiliency in used car prices
Lookers is the UK's fourth-largest automotive retailer by revenue with a network of 198 sales and aftersales outlets.
In June it posted a 10.8% increase in new car sales for the first three months of the year, outpacing growth of 8% in the broader market. Profit margins on new vehicles remained strong at 7.9%, down slightly from 8% a year earlier.
Meanwhile, fleet and commercial vehicle volumes were up by 1%, with gross profit margins improved to 5.0% against 4.3% previously. Used car volumes in the first quarter were down by 5.9%, with gross profit per unit sold at £1,648.
Vertu said yesterday that it remains "optimistic for the future" but also sounded a note of caution amid the continuing cost-of-living crisis: "Whilst used vehicle purchases remain essential for many, the market outlook remains unclear due to the impact of inflationary pressures and higher interest rates for consumers."
Shares in Vertu closed yesterday's trading 0.3p higher at 69.9p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel