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Vertu expects a strong March result as it prepares to reveal record profits

Vertu Motors reports that its March order take is up by 11.6% year-on-year as the car dealer group prepares to announce record revenues and profits from its latest financial year.

It will release its preliminary results for the year to February 29 on May 11, however a trading update today shows its overall revenues for the five months to January 31 increased by 17.6% overall and 7.2% on a like-for-like basis.

 

Increase (decrease) year-on-year

 

                 Total

           Like-for-like

           SMMT registrations

Group Revenues

+17.6%

+7.2%

-

Service Revenues

+13.4%

+5.6%

-

 

 

 

 

Volumes:

 

 

 

New retail vehicles

+13.1%

+6.5%

+3.6%

Motability vehicles

+2.3%

(3.7%)

(6.3%)

New Commercial vehicles

+24.7%

+15.4%

+11.1%

New fleet cars

+2.8%

(2.8%)

+9.0%

Used retail vehicles

+17.1%

+10.8%

-

 

Vertu said vehicle servicing like-for-like revenues increased by 5.6% in the five month period, fuelled by its service retention and vehicle health check processes, which has helped to improve the group’s like-for-like aftersales gross profits by 6.7%.

In the new vehicle markets, Vertu increased its market share by outperforming the retail, Motabilit and LCV national markets and said its like-for-like retail new vehicle gross profit per unit increased as manufacturer targets were achieved at high levels, generating strong growth in new vehicle profits. Profits also increased in LCVs, and also in fleet where Vertu has pulled back from some lower margin daily rental channels.

In the used car market, Vertu said, its increased marketing activity has resulted in like-for-like volume growth of 10.8%, which it said is significantly ahead of the estimated overall used car market growth. Total gross margin also improved on a like-for-like basis by 5.4%.

The statement from Vertu added: “The board sees the UK new car market stabilising at current levels. The key drivers of supply push from European manufacturers are likely to stay in place for the medium term due to the importance of the UK market in the European context.

“March remains the most significant month for the UK motor retail sector profitability due to the registration plate change.  The order book for retail new cars on a like-for-like basis was 11.6% ahead of last year as at 26 February 2016 and whilst there is a long way to go to deliver a successful March, current trading is clearly robust.

“In the context of a long period of rising new car sales, the used car market and aftersales area are also likely to show growth.  The group’s marketing and retention strategies are delivering growth in market share in these important, higher margin channels.”



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