Vertu speeds up stock turn, expects more used car price declines

Vertu Motors says it has applied price adjustments to increase speed of sale and and reduce its used vehicle inventory in light of used car wholesale market movements.

In a trading update, the AM100 dealer group said there has veen "a material change in the used vehicle market with UK wholesale values experiencing a significant reduction in October and November",

The group adapted to these changing market dynamics, applying its Vertu Insights pricing algorithm to ensure vehicles were priced effectively, to ensure increased stock turn and thus a reduction in group inventory levels. 

Group like-for-like used vehicle volumes fell 2.0% in the period, an improvement on the 5.7% reduction in the first half of the financial year.  Gross profit generation from used car sales were, however, below those anticipated.

"The board consider that UK used vehicle values are likely to continue to weaken above historic norms in the near term. Once the current pricing correction has eased, used car prices in the UK will be more affordable to the consumer and margins should stabilise. Reducing interest rates in the medium-term would also aid affordability and provide a further stimulus to a market benefitting from increased supply," it added.

Robert Forrester, Vertu Motors chief executive, said: "The current consumer environment remains volatile and recent trends of sluggish new car retail demand and weakness in used car pricing are likely to persist for some months.  Vertu remains very focused on delivering outstanding customer experience, tightly controlling inventory and being diligent on costs. 

"The group has a strong balance sheet and long track record of operational excellence and financial discipline.  These attributes mean we remain very confident in our ability to take advantage of these challenging market conditions and the resulting increased opportunities in the sector."