Peter Jones, Vertu Motors chairman, has said the group’s like-for-like aftersales profitability and has helped the business remain ‘resilient’ despite a downturn in consumer confidence in Q2.
At Vertu’s AGM today, Jones said the group had a strong Q1, particularly during the plate-change month of March, followed by softer trading in April, May and June.
Jones said the Vertu board believes the market softening is linked to the Vehicle Excise Duty ("VED") increase in April, the impact of sterling depreciation on new vehicle pricing and customer uncertainty regarding the General Election and the macroeconomic environment.
Jones said pricing disciplines and cost control minimised the impact of the market conditions on the group's profitability, and as a consequence the group delivered higher like-for-like profits year on year during the four-month period to June 30, 2017.
The March plate change month, the most profitable month of the year for franchised motor retailers, saw a record number of new vehicle registrations in the UK.
Jones said the VED changes in April meant buyers pulled their purchases forward and this resulted in a softening of new retail sales volumes and used vehicle margins, particularly in premium vehicle franchises.
Aftersales like-for-like revenues and profitability increased in the four month period, underpinned by the group's retention strategies which Jones said had helped to make the revenue stream resilient.
Jone said: “Though market conditions have softened, I am pleased to confirm the company remains well positioned both operationally and financially.
“Accordingly, at this stage, the board expects the group's trading performance for the year ending February 28, 2018 to be in line with market expectations.”
Jones said Vertu is still acquisitive and it is progressing with the disposal of freehold assets which are not required for the ongoing operations of the business. Two transactions are waiting on planning applications to be progressed.
The disposals are expected to yield cash in excess of £7m in the current financial year.