Vertu Motors has posted a profit before tax increase of 6.5% to £34.6 million for its full year results on record revenues of £4.7 billion.
Robert Forrester, Vertu’s chief executive, said he was pleased with the performance as the group successfully navigated a difficult period of trading with declining used car values in the last few months of 2023.
Forrester said: “Used vehicle prices and margins have now stabilised and there has been strong cash generation from lower working capital reducing net debt below market expectations.
“Moving to the new financial year, March and April 2024 were successful months.
“The group delivered new retail like-for-like sales volumes ahead of the market decline in March and April.
This demonstrates the robustness and strength of the group’s operations. We remain focused and thoughtful around capital allocation.”
Adding BYD "next logical step"
Vertu confirmed as part of its full year results that it has parntered with new Chinese brand BYD and will open showroom locations "shortly" in Worcester and Gloucester.
The business already represents Smart (now a 50/50 partnership between Mercedes and Geely) and MG. It has expanded with the latter and is planning to add more Smart locations too.
Forrester told AM adding BYD was the next logical step.
He said: "BYD is the largest BEV brand in the world and products like the 350-mile range Seal are very good.
"The Worcester and Gloucester market area will give us a good indication of how the brand operates and whether they like what we do and in turn, if we like what they do."
ZEV mandate creating supply and demand "imbalance"
Forrester highlighted that the ZEV mandate (the rules put in place this year to make sure car manufacturers hit a certain volume of new battery electric vehicles (BEV) sales) is creating a supply and demand imbalance, with true retail demand for BEVs, in Forrester's opinion, at around 10%.
This is a way off the intended 22% market share target for BEVs in 2024.
He told AM: "Fleet demand is still strong, but retail demand for BEV has fallen away and I believe the OEMs have done their best to stimulate demand.
"I think OEMs are probably losing significant amounts of money on BEV sales. The knock on effect of all this could be that we see a choking off of supply for petrol and diesel vehicles in order to help meet these ZEV targets.
"Any choking on volumes is clearly going to have an impact to retailers. What happens if those volumes go down? I think we're going to see some hard trends as a result of the ZEV mandate and it's certainly bad news for the OEMs.
"It's a difficult situation. Another consequence of restricted new car supply will be increased used car prices. We're closely observing how this is all developing."
Aftersales and finance digitilisation
Digitlisation is one of Vertu's key business pillars and the group has been focussing on improving the customer journey and systems to smooth out the aftersales experience, particularly around areas like remote authorisation for work identified by vehicle health checks.
Vertu has a dedicated team of 56 developers and robotics specialists.
Over the years, Vertu has developed in-house bespoke and proprietary systems, including its showroom sales process system, fully integrated with the group’s online customer journey, management information systems that provide data in real time and used vehicle inventory management systems.
An increasing focus for 2024 is to look at the group's finance function and to automate processes where possible to make further efficiency improvements.
Big and small acquisitions still on the cards
Following on from the integration of Vertu's Helston and Rowe acqusitions, Forrester confirmed the group remains acquisitive for the right businesses in the right location.
He said: "We're looking at some bolt on additions, but there are also a few larger acqusitions that could make sense for us. I never rule anything out.
"We have the financial power available move on something if we think it's right for the business."
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