Car dealer group Vertu bullish after strong September

Car dealer group Vertu Motors said it had outperformed the market with better than expected new car sales in the key month of September.

The Newcastle-based firm said while new car retail volumes declined 19% in the UK as a whole last month, the group only saw volumes fall by 2.6% and it was now on course to deliver a record profit for the full financial year.

The strong result for Vertu, which is the UK’s 8th largest car dealership group, posted a 24% rise in pre-tax profit to £5.2 million on sales of £511.1 million for the six months to September.

The company said consumer demand had not tailed off as dramatically as expected following the end of the scrappage scheme.

Robert Forrester, chief executive of Vertu, said: “Everybody thinks the consumer is dead, but our volumes, with new and used car sales up more than 6%, show that’s not true.

“We had a used-car event this weekend, and we sold more cars than we’ve sold ever at one before. The South of England is more robust than the North.”

Forrester said trading for the year now looked like it would beat expectations, in part because the credit market was ‘easing’.

He added: “The percentage of finance rejections is down 3% over the last six months. That small percentage increase can make a big difference on the volumes we deal with.”

Forrester also brushed aside any fears over January’s VAT increase. “Over the past two years, new car prices have increased 22%, I’m sanguine about the 2.5% VAT hike. It pales into insignificance,” he said.

In the first half of the year, new and used car sales by volume were up 6.4% and 6.1% respectively on a like-for-like basis, which lifted group revenues by 27% to £511 million.

The group revealed 43% of its gross came from aftersales, including servicing, body repairs and supply of parts.

Vertu operates 70 franchised and four non-franchised outlets from 59 locations across the UK, including Ford, Vauxhall and Peugeot outlets and has added 16 outlets to its portfolio since March 1st, with Nissan, Alfa Romeo and Mitsubishi now in its franchise portfolio.