Motor retailer Vertu has warned of future uncertainty driven by inflationary pressures despite seeing a hike in new car sales volumes.
Bosses at the Gateshead company, which now has a network of 189 sales and aftersales outlets across the UK, say they remain optimistic for the future, having seen new vehicle supply improve whilst constraints in used vehicle supply continue, aiding used vehicle values and gross profit.
But the business – which trades under the Bristol Street Motors, Vertu Motors and Macklin Motors brands – issued a cautionary note saying: “The market outlook, however, remains unclear due to uncertainty of consumer demand in the light of the impact of inflationary pressures and higher interest rates.”
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The comments came as the firm issued a trading update for the three months to May 31, in which profits were ahead of last year, thanks to its acquisition of the Helston Garages Group. The deal added 27 outlets to its portfolio, and despite continued inflationary-driven cost headwinds. The board expects full year results for its 2024 financial year to be in line with current market expectations.
Within the three month period Vertu saw new car retail and motability like-for-like volume growth of 10.8%, with like-for-like new vehicle margins remaining strong at 7.9%, compared to 8% last year. Used vehicle like-for-like volumes declined 5.9%, reflecting on-going supply constraints, and the group is focusing on pricing disciplines. The group’s average used vehicle selling price per unit grew by 3.4% on a like-for-like basis to over £21,000.
Services revenues increased 4% like-for-like compared to prior year. Vertu has seen improved gross profit in all aftersales channels but gross margin dropped because of higher technician salary costs. The company said technician capacity remains a continued constraint on revenue growth, with new initiatives being planned to address the shortage. Group operating expenses were slightly higher, reflecting the anticipated higher energy costs, pay actions and investment in IT.
Chief executive Robert Forrester said: “I am pleased to report that trading remains positive. The entire, recently enlarged, Vertu team has put in hard work and dedication once again, and I would like to thank them all.
“Used car pricing has remained firm and we have gained market share in the new car market. The performance of our high margin aftersales business has remained strong. The integration of Helston Garages is progressing well and is on track to deliver the planned synergies. We are excited about the opportunities our enlarged portfolio will create for Vertu Motors.”
