Vertu Motors reports upbeat trading, warns of volatile impact of emissions targets

Vertu Motors' first-quarter figures reflected a period of robust growth and strategic progress, boding well for the remainder of the financial year despite the potential impact of zero emissions targets.

Manufacturers selling new vehicles in the UK face challenges in managing the mix of internal combustion engine (ICE) and battery electric vehicles (BEV) due to ambitions to reduce emissions. This will likely continue to lead to disruptions in supply and pricing as manufacturers strive to comply with regulations.

In the three-month period ending 31 May, Vertu Motors - one of the biggest motor retailers in the AM100 - performed well across various segments although noted that the UK's Zero Emission Mandate could introduce volatility in the new car market.

This may lead to a reduced supply of new petrol and diesel cars, potentially increasing values going forward.

Even so, new car retail and Motability sales saw a like-for-like volume increase of 6.8%, resulting in a gain in market share. However, the margins for new vehicles decreased slightly to 7.4% from 8.1% last year, due to a higher mix of lower-margin Motability sales and increased discounting.

Fleet and commercial vehicle sales also performed, with like-for-like volumes rising by 6.4%. through focusing on profitable fleet sales channels and maintaining stable gross margins.

Meanwhile, used vehicle sales continued to show strength, with a like-for-like volume growth of 6.7%, as used car prices tracked more normalised seasonal trends.

Service revenues posted an impressive 10.1% like-for-like increase compared to the previous year, partly attributed to the company's investment in technician resources. Additionally, gross profit improved across all aftersales channels on a like-for-like basis.

The company's high-margin aftersales business is expected to continue its growth trajectory, supported by increased resource levels and strategies focused on customer retention and higher average invoice values.

Vertu Motors credited new in-house developed technologies for enhancing revenue, customer retention, and workforce productivity.

Vertu Motors said it was also evaluating several growth opportunities, noting that the franchised retail market remains highly fragmented. The company currently represents about 5% of the sector.

Robert Forrester, CEO of Vertu Motors, said: "I am pleased to report that trading remains positive. Used car pricing has remained stable, we have gained market share in the new retail and Motability car market and delivered strong like-for-like volume growth in used vehicles. The performance of our high-margin aftersales business has remained strong."

The company said it expects its full-year results for the financial year 2025 to align with current market expectations.