Ford dealer collapses

Vertu Motors plc was formed in 2006 with the stated aim to “acquire and consolidate” UK motor retail businesses. Its vision is simple: ‘get, sell, keep’.

It trades under the Bristol Street Motors, Macklin Motors, Vertu Honda and Bristol Street Motor Nation brands. Vertu is listed on the AIM market (UK:VTU).

The group operates 75 franchised and three non-franchised sales operations from 66 United Kingdom locations.

Vertu Motors saw pre-tax profits increase by 26.8% to £5.1 million in its interim results for the six months ended August 31, 2012.

The results exceeded analyst adjusted PBT forecasts by 11%, with a 16.3% increase to £5m.

Revenue increased by 14.8% to £628.1m

Used car volumes were up by 7.5% with gross profit per unit remaining above £1,000. Vertu has benefitted from expanding the number of used car buyers that work across the business which has aided the sourcing of stock.

New car volumes were up by 7.9%, excluding Motability which saw an 8% drop in revenues due to "lower applications".

Gross profit per unit on new cars was down slightly, but sits at £941.

Fleet and commercial volumes increased by 14% during the period and aftersales also delivered 4.1% growth rate in volumes despite an ongoing falling car parc, with service revenues more than offsetting weakness in accident repairs and parts.

Acquisitions made in 2012 made a positive contribution, with acquisitions made this year making a small loss as expected. There were also a couple of closures that marginally diluted the bottom line, as management continue to seek to optimise the group portfolio and lower its fixed cost base where possible.

The top priority for the group is making sure it has the management capacity in place to successfully turn around its acquisitions.

The half year results also revealed vehicle margins at 7.2%. Return on investment in used cars was 155%.

Aftersales operations generated 42.7% of the group's gross profit, a slight decline and a reflection of "substantial" growth in vehicle sales. Like-for-like service revenues rose 4.1%.

The group has undrawn bank facilities of £35.5m at August 2012.

Vertu says it will add the Volvo franchise to its portfolio from January 2013 at its Derby site.

The group closed a Bristol Street Motor Nation site in Widnes in October 2012, a Ford dealership in Smethwick and two unprofitable accident repair centres in Stafford and Dunfermline.

In December 2012, Vertu became the UK's largest Honda retailer (10 sites, including one motorcycle centre in Grantham) with the acquisition of the trade and assets of three sites from Springfield Cars at Sunderland, Newcastle and Durham for £3.7m.

Bristol Street Motors originated in the early 1900’s as a single Ford dealership located on Bristol Street in central Birmingham.

The business grew to become one of the largest dealer groups in the UK with a nationwide chain of franchised motor dealerships offering sales, service, parts, and bodyshop facilities for new and used car and commercial vehicles.

The group also operates a number of Bristol Street Motor Nation used car outlets and a number of Honda dealerships.

In 2010 Vertu Motors expanded into Scotland, trading under the Macklin Motors brand.

Shareholders include Black Rock Inc (with the majority share at 14.3%), F&C Asset Management and Artemis.

Ford has been steadily progressing its model range.

Core models such as the Focus build on the strengths of the previous iterations of the best-selling model, while other core offerings are tweaked, updated and improved.

Sales performance hasn't recovered since last year, when car sales dropped below 300,000 for the first time, so expectations will be for a turnaround soon as the market strength returns.

Note: Manufacturers administer the franchised contracts for cars and LCVs in different ways. Broadly, for some the contract to sell cars and LCVs is managed through a separate dealer contract. For others one contract covers both vehicle types.

AMi seeks to acknowledge the difference and reflect it in the count of each dealer groups total franchised outlets (franchised businesses) and sites (locations).

Ford treats car and LCV sales as coming under separate contracts –AMi counts each individually.