8:29 am, September 2, 2024
Dealer group Vertu Motors has reported a strong five-month trading performance despite new car sales falling due to a ‘soft’ market and some manufacturer discounting.
Announced via the London Stock Exchange this morning (Sept 2), the trading update for the five-month period to July 31, 2024, showed like-for-like group revenues were up by 3.3%, while service revenues rose 8.4% like-for-like.
The update, issued just over a month before six-month interim results will be published, said that full-year adjusted FY25 profit before tax is expected to be ‘broadly in-line with current market consensus’.
It added that H1 profits will be lower than in previous uses ‘as anticipated’, although H2 is expected to improve on prior year levels thanks to ‘a stronger used car market and enhanced used vehicle trade values’.
Used car sales jumped by 5% and gross margin rose to 7.2%, and the company reported used values were ‘stable on increasingly constrained supply’.
However, while used car sales rose, sales of new cars fell 5.8%.
Vertu noted that this was still a significant outperformance of the UK market as a whole, though, which declined by 12.1%. Nevertheless, Vertu stated that it is seeing manufacturers discounting and ‘margins softening’ in several franchises it operates where there is oversupply.
Sales of Motability vehicles rose by 26.5% in the period and fleet cars jumped by 9.4%. New commercial vehicle volumes, however, fell by 15.6%.
Vertu noted that its fleet and commercial vehicle activity does not include ‘significant volume through the low margin daily rental channel, which is a key part of the strong growth in the UK market trends’. Vertu’s margins in this channel held steady at 5.3% (FY24: 5.2%).
During the period, Vertu opened its first BYD dealership – the site, in Worcester, opened alongside Vertu’s existing Ford and Citroen dealerships – its first Ducati showroom, and a Peugeot dealership in Carlisle.
In July, Vertu acquired a Honda dealership in Exeter from Hendy Group for £1.1m.
Commenting on the five-month performance, Vertu Motors CEO Robert Forrester said: ‘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.
‘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.’
Vertu Motors currently has 192 dealerships across the UK, operated under the Vertu, Bristol Street Motors and Macklin brands.
Results for the six-month period ended August 31, 2024, will be published on October 16.
