Car dealership Vertu Motors reports that used vehicle prices have stabilised

It warned in December that this would knock its profits, although it said it would also make them more affordable to buyers.

Vertu said in its latest update that the used car prices have “stabilised in recent weeks following post-October wholesale pricing correction”, and are now more in line with seasonal norms, with like-for-like sales by volume up 0.8 per cent in the five months to January 31.

This marked a recovery from a 5.7 per cent drop in the first six months of its financial year.

But it said the new vehicle market continued to suffer, with like-for-like sales by volume down 5.1 per cent in the five months to the end of January amid cost pressures on consumers, with car makers ramping up incentives and offering discounts to boost demand.

Vertu said: “The group’s new vehicle order-take for the important plate change month of March is currently tracking at levels below prior year level as order banks have been satisfied and the UK moves to a supply push market.

“These trends have the potential to impact margin and volumes and leads to an uncertainty for the new retail market.”

Robert Forrester, chief executive of Vertu Motors, said the group was having to adapt to a “fast-changing market backdrop, with used vehicle prices now stabilised at lower levels and consumer uncertainty impacting retail demand for new cars”.

Vertu said profit margins from used cars have started to recover since January, as new stock has been added.

It said: “The group has worked hard and proactively to increase used vehicle stock turn and reduce overall inventory levels.

“Consequently, in recent weeks, improved used vehicle gross profit per unit has been generated by the Group.”

The group forecast that full-year underlying pre-tax profits would be “broadly” in line with recently lowered market expectations.

Overall group revenues lifted 7.8 per cent in the most recent five months thanks to a more resilient performance from its after-sales business, mobility sales and also cost cutting actions.

The number of used cars sold increased by 5.1 per cent in 2023, with some 7.2 million models changing hands, according to data issued by the Society of Motor Manufacturers and Traders (SMMT) last month.