Vertu Motors says new car prices still spiking as it posts £2bn revenues
The group said it made £28 million in profits in the first half of the year.
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Your support makes all the difference.Car dealership group Vertu Motors has reported its second highest half-year of profits as the price of new cars continues to spike.
The group said it made £28 million in profits in the first half of the year after raking in £2 billion in revenues.
It is almost half the £52 million the group made last year after the exceptional post-pandemic period when new and used car prices went through the roof.
But new cars prices have continued to climb and were 13% higher in the six months to August 31 compared with the same period last year. The average selling price of a new vehicle was £24,294, Vertu said.
The group took in £7.7 million more in gross profits from new vehicle sales, despite the volume of sales dropping by a 10th and the number of new cars delivered to the dealership reducing by 7%.
The car industry has been racked with severe supply constraints since the pandemic, driven by shortages of semi-conductors and global supply chain disruption.
But Vertu said consumers “continue to accept” long lead times for new cars as a result of shortages, and that its order bank levels remain very high.
Used cars also experienced “extraordinary” price rises in 2021 when low stock combined with high consumer demand.
Three-year-old vehicles increased in value by a fifth in the three months between May and August last year, Vertu said.
While demand has eased since then, prices remain unusually high and dipped just 2.1% in the same period this year.
The group sold 15% fewer used cars, resulting in a £15.8 million drop in profits in the six months to August 2021, compared with the same period last year.
Vertu said this decline was driven by subdued consumer demand in September as people were impacted by energy concerns, as well as the death of the Queen.
Supply constraints in new and used vehicles continuing well into the next financial year means that margins will remain strong and used car pricing robust, the group said.
It also expects its profits for the financial year to February 28 to be higher than current market expectations.
The group hinted at further takeovers with a “strong acquisition pipeline” and plans to expand its dealerships in the UK.
Robert Forrester, chief executive of Vertu Motors, said: “The first half has seen a strong trading performance with vehicle margin strength offsetting market-driven volume shortfalls.
“The group continues to benefit from its focus on operational excellence around cost, conversion and customer experience aided by continued digitalisation initiatives.
“The business is strategically very well placed with significant firepower to expand its footprint of franchised dealerships across the UK.”
Shares in Vertu were up by more than 6% on Wednesday morning.