Vertu Motors braces for lower half-year profits as new car sales fall
Car dealership Vertu Motors has said half-year profits will come in lower as demand for new cars and more expensive electric vehicles remains under pressure.
The group, 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.
Used car sales were more resilient, up 5% by volume in the five months, helping overall group revenues lift 3.3% on a like-for-like basis.
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.
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.
Vertu blamed the new car market woes on the stretching targets for car manufacturers to achieve specific zero emissions vehicle (ZEV) sales targets.
More than a fifth (22%) of new cars sold by manufacturers in the UK next year must be zero emission, rising to 80% in 2030, under rules brought in by the former Conservative government.
This is leading to a strong supply of electric vehicles as manufacturers aim to meet government targets, but this comes amid weaker demand from more cost-conscious buyers.
Vertu Motors chief executive Robert Forrester said: "The retail new car market remains weaker as the Government's regulation to transition to battery electric vehicles causes market volatility and negative impacts."
Car makers are resorting to discounting as supply is outstripping demand, the group added.
But Vertu said it is outperforming a weak market, with new car registrations plunging 12.1% in the wider market over the five months to July 31.
