Vertu Motors new car sales growth offsets drop in second hand demand
Britain's fourth-biggest automotive retailer reported new car volumes rose by 7 per cent on a like-for-like basis in the three months ending May, compared to 5.6 per cent growth across the UK retail market.
Comparable fleet and commercial vehicle volumes expanded by 3 per cent despite the UK commercial van market experiencing a decline, while the firm's high-margin service revenues increased by 4.1 per cent.
However, like-for-like motability volumes remained depressed, plunging by 23.2 per cent due to market share continuing to shift away from traditional manufacturers.
Meanwhile, weaker customer demand and tight supply led to a 3.8 per cent decline in used vehicle volumes.
However, used car margins improved from 7.3 to 7.5 per cent during the period.
Vertu also said it achieved higher gross profits in its service and parts divisions during the period and its adjusted pre-tax profits were better year-on-year.
Following the performance, the Gateshead-based company expects its annual results to be commensurate with forecasts.
Robert Forrester, chief executive of Vertu, said: 'Since the beginning of the financial year, a period which includes the important trading month of March, the group has traded well in a challenging macro-economic environment.'
But he added: 'This encouraging start to the year is balanced by ongoing headwinds of a challenging consumer and business environment and the Government's ZEV mandate promoting accelerated electric car adoption.'
Under the ZEV mandate, automakers must sell a minimum percentage of battery electric vehicles each year in order to reduce the number of cars on the road with internal combustion engines.
To avoid fines for not meeting targets, manufacturers can borrow credits from future years or purchase them from carmakers who are complying with the rules.
For the current year, 28 per cent of new car sales and 16 per cent of vans have to be zero-emission. By 2030, it must be 80 per cent for cars and 70 per cent for vans.
Many automobile manufacturers have criticised the rules for being too ambitious and warned that they could lead to redundancies or billions in lost investment.
In early February, Vertu claimed the mandate was causing 'disruption' to the UK new car market and called on the UK Government to introduce 'significant' incentives to boost battery EV demand.
Founded in 2006, Vertu operates 195 franchised sales outlets that sell a wide array of famous brands, including Audi, Hyundai, Nissan and Volkswagen.
Vertu Motors shares were 0.5 per cent higher at 62.5p by late Wednesday afternoon but have fallen by around 19 per cent over the past year.
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