VERTU Motors today revealed falling half-year profits as sales of new cars tumbled more than 10 per cent amid price hikes caused by the Brexit-hit pound.
The group, which has 123 showrooms and outlets across the UK, posted a seven per cent drop in pre-tax profits to £16.1m in its unaudited results for the six months to August 31.
It said like-for-like sales of new cars dropped 10.1 per cent as drivers held on to their existing motors for longer in the face of higher prices caused by the Brexit-hit pound, as well as falling used car values.
But used car sales rose 1.6 per cent on a like-for-like basis and Vertu said prices in the used market had now stabilised, although those at the premium end remain under pressure.
Vertu added that new car sales had continued to fall in September, down 1.6 per cent on a like-for-like basis.
Total revenues grew by £86.7m to £1.6bn.
It said: ‘Continued sterling weakness driving price rises and declining used car residual values have led to an increase in the cost to change for consumers seeking a new car. This has reduced demand, with change cycles lengthening.’
The company said it remained on track for the full year, a;though it added a note of caution amid Brexit uncertainty.
‘Continuing political uncertainty has potential to undermine consumer demand notwithstanding continued UK economic growth and record employment levels,’ the group said.
The sector has been knocked hard by a declining car market. The latest figures from the Society of Motor Manufacturers and Traders showed demand for new cars has fallen 2.5 per cent so far during 2019.
Rival car dealership Pendragon – which trades under the Evans Halshaw and Stratstone brands – recently revealed plans to axe around 300 jobs and shut more than 20 Car Store showrooms as it warned over steep annual losses.
Chief executive Robert Forrester, pictured, said: ‘The group performed well in the first half against a more challenging backdrop. We have an experienced leadership team, well-invested systems and operationally we are keeping our discipline by doing all the basics very well, delivering a strong customer experience, and leaving the group in a position to outperform.
‘Our omni-channel retailing strategy and discipline around the allocation of capital, coupled with a net cash position, underpins the board’s confidence in the future.’