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Vertu Motors PLC on Monday backed its full-year outlook despite a weak new car retail market and margin pressures. The car dealership, which has 192 showrooms and after-sales sites across the UK, said new car sales by volume fell 5.8% in the five months to July 31. Margins have been put under pressure and there has been a growth in the pipeline inventory of new vehicles held by manufacturers and retailers, the firm noted. Core group gross profit margin on new retail and Motability vehicle sales was 7.9% in the period, Vertu said, compared with 8.8% in financial 2024. Used car sales were more resilient, up 5% by volume in the five months, helping overall group revenue lift 3.3% on a like-for-like basis. In addition, Vertu said its high margin aftersales operations delivered a ‘robust’ performance with revenue and gross profit growth achieved in all areas on the back of strong execution and higher technician resources. Vertu said that, while first-half profits are expected to be lower, its performance is set to improve year on year in the final six months thanks to the stronger used car market. This will leave full-year underlying earnings ‘broadly’ in line with expectations. Vertu said retail demand for new vehicles, particularly electric vehicles, is likely to remain weak, driven in part by high vehicle prices and the lack of government financial incentives. The firm noted new vehicle order-take for the important plate change month of September is currently tracking at levels below prior year reflective of the weakening retail market in 2024. But Vertu expects reduced supply of used vehicles to keep used car prices stable, while lower interest rates should aid the future affordability. The company added that it remains ‘highly focused on cost and efficiency’ as higher staff wage bills push up cost pressures, with plans to roll out trials automating some admin and finance tasks in the coming months. Looking ahead, Vertu said it is ‘delivering on its stated strategy and is well-positioned to take advantage of opportunities that arise whilst the market remains in an adjustment period, given the group’s track record of execution and strong financial position. The board remains highly confident in the group’s long-term prospects.’ Shares in Vertu eased 2.8% to 69.60 pence each in London on Monday. Copyright 2024 Alliance News Ltd. All Rights Reserved.
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