Vertu warns of lower profits as electric vehicle demand becomes muted and wholesale values reduce

Last year saw a record high for the firm as profits for the full year reached £80 million.

Robert Forrester, chief executive officer of Vertu, said: "The current consumer environment remains volatile and recent trends of sluggish new car retail demand and weakness in used car pricing are likely to persist for some months.

“Vertu remains very focused on delivering outstanding customer experience, tightly controlling inventory and being diligent on costs. The Group has a strong balance sheet and long track record of operational excellence and financial discipline. These attributes mean we remain very confident in our ability to take advantage of these challenging market conditions and the resulting increased opportunities in the sector."

The company said the used car market had experienced a “material change”, due to higher supply into the wholesale markets, in conjunction with retail demand being affected by the both higher interest rates and high vehicle prices impacting affordability.

Vertu noted that at the start of the period, used car venues were approximately 20 per cent higher than in January of 2021, with cap hpi reporting that values have fallen on average 4.2 per cent in October and November.

The group said it had also seen greater weakness in high-end premium product values, which it started to experience in September. Cap hpi reported drops of between seven and 11 per cent per month in the premium brand segment.

The firm also noted that the increase in supply to the UK vehicle market had affected its business. It noted that the calendar year to November 2023 had seen UK car registrations increase by 18.6 per cent due to significant product flow into the fleet market.

New car volumes, however, only marginally increased.

Vertu said vehicle demand had also become increasingly muted in recent months, particularly in the Battery Electric Vehicle market.

The firm noted, however, that fleet and commercial volumes and gross profit generation rose in the period year-on-year.

Vertu, which was founded in 2006 by Mr Forrester, holds a network of 195 sales and aftersales outlets across the UK including in Bradford, York and Doncaster.