Vertu: Car dealership group warns that prolonged Iran war could raise vehicle prices
Car dealership group Vertu Motors has warned that a prolonged war in Iran could drive vehicle prices higher as it also stockpiled motor oil over supply concerns.
Shares in the London-listed firm dipped on Wednesday as profits were impacted by Government EV (electric vehicle) targets and last year’s Jaguar Land Rover cyberattack.
Vertu reported that it had yet to see a direct impact from the conflict in the Middle East, pointing towards “strong” trading in March and April.
Boss Robert Forrester told the Press Association that the war and related spike in fuel prices has “reduced demand for diesel cars”, while demand for electric cars has risen.
Diesel prices have risen by more than 31 per cent, to an average of 187.48 pence per litre, since the conflict began in late February.
He added that supply of motor oil used in its servicing operations, which typically comes from Qatar, has also been impacted by the conflict.
“We have built up a strong central stock of motor oil, but we did have some orders knocked back because there is a large dislocation in supply in the region,” Mr Forrester said.
The company also highlighted strong demand for older vehicles, pointing towards particular sales growth for cars which are “seven years or older” due to pressure on consumer finances.
It came as Vertu said its finances came under pressure from the Government Zero Emission Vehicles (ZEV) mandate over the year to February.
Government policy is seeking to ensure that 80 per cent of new cars and 70 per cent of new vans sold in Britain will be zero emission by 2030, increasing to 100 per cent in 2035.
The dealership said this is leading an oversupply which is bringing down the prices of electric vehicles and impacting profitability.
Vertu reported an adjusted pre-tax profit of £24.5m for the year, dropping from £29.3m a year earlier.
The figure landed ahead of anaysts expectations of £24.0m with a range of £23.4m to £24.4m.
It came despite revenues increasing to £4.83bn, compared with £4.76bn a year earlier.
In a statement issued alongside the company’s results, Mr Forrester added: “The group has delivered solid results against the backdrop of sector pressures from the Government’s ZEV mandate on new car profitability, as we have focused on controlling the controllables, such as aftersales and cost.
“The group is benefiting from stable management, a highly trained and committed workforce, strong cashflows funding a maintained dividend, another £12m share buyback and significant asset backing.
“The group is therefore excellently positioned to take advantage of the inevitable opportunities that will arise as the sector continues to consolidate.”
Mr Forrester added that he was “delighted that the trading performance in March and April has been strong and ahead of the prior year period, which is a testament to the quality and hard work of the excellent Vertu team.”