In the five months leading up to January 31, the car dealership group observed a steady trend in used car prices, with a 0.8% increase in sales by volume. However, new vehicle sales faced a contrasting scenario, experiencing a 5.1% decline during the same period.
Vertu Motors Sees Stability in Used Car Prices Amidst Market Shifts
Car dealership Vertu Motors reported that used vehicle prices have stabilized after a significant decline, offering relief following steep falls between October and December, which contributed to a 10.3% drop. This correction in pricing, although impacting profits, has made cars more affordable for buyers.
The company highlighted a stabilization in used car prices in recent weeks, aligning more closely with seasonal norms. Despite the earlier decline, like-for-like sales by volume increased by 0.8% in the five months leading up to January 31.
However, Vertu Motors cautioned that consumer uncertainty continues to impact the demand for new models. This observation underscores the ongoing challenges faced by the automotive industry, with shifting market dynamics influenced by economic factors and buyer behaviour.
The contrasting trends in used and new car segments reflect the complex landscape that car dealerships navigate amid broader market conditions.
“These trends have the potential to impact margin and volumes and leads to an uncertainty for the new retail market.”
Vertu Motors' Strategic Response to Stabilized Used Car Prices and Market Challenges
Robert Forrester, Chief Executive of Vertu Motors, acknowledged the need for the group to navigate a "fast-changing market backdrop." He emphasized the adaptation required due to stabilized, lower levels of used vehicle prices and the lingering impact of consumer uncertainty affecting the demand for new cars.
The company noted a positive trend in profit margins from used cars, showing signs of recovery since January with the addition of new stock. Vertu highlighted its proactive efforts to enhance the turnover of used vehicle stock and reduce overall inventory levels, resulting in improved gross profit per unit in recent weeks.
Vertu Motors anticipates that full-year underlying pre-tax profits will align "broadly" with recently adjusted market expectations. Despite challenges, the group experienced a 7.8% increase in overall revenues over the last five months. This growth was attributed to a more resilient performance in after-sales business, mobility sales, and cost-cutting measures.