Vertu Motors has recorded a solid start to the financial year due to continued supply chain troubles creating a shortfall of vehicles for sale.
Since reporting its full-year results in May, the automotive retailer said the shortage and steep price of motors across all channels had enabled its gross margins to remain significantly high.
The Gateshead-based company, which owns the Bristol Street Motors and Macklin Motors dealership businesses, admitted the volume of used cars had experienced a ‘significant decline’ on a like-for-like basis last month.
Performance: Automotive retailer Vertu Motors said the shortage and steep price of vehicles across all channels had enabled its gross margins to remain significantly high
This was largely because of the release of pent-up demand during the comparative period in 2021, when the loosening of travel restrictions by the UK Government led to a resurgence in automobile purchases.
Yet it noted that the profit on each used car purchase was greater than last year’s levels, while its high-margin aftersales departments were aided by the expansion in the number of working days.
Gross margins in its new retail and fleet channels have also stayed strong following the disruption in vehicle production, which is partly the result of a worldwide shortage of semiconductors.
Vertu said the volume of new motors is set to ‘improve gradually’ in the coming months even as it warned that consumer demand and vehicle supply forecasts remained uncertain.
Alongside the trading update, the group revealed that investors had overwhelmingly approved all the resolutions at its annual general meeting.
However, more than 17 per cent of its shareholders had each voted against re-electing chairman Andrew Goss and the firm’s proposed dividend.
A final dividend of 1.05p per share was recommended by board members in May when Vertu reported its best ever annual trading results.
Revenues for the year ending February 28 jumped ahead of pre-pandemic levels after skyrocketing by over £1billion, helping profits increase by 268 per cent to £60million.
The AIM-listed company said it ‘has had a strong start to the financial year, but it is premature at this stage to indicate any changes to market expectations of the full-year trading profits.
‘Management remains focused on the delivery of operational excellence around cost, conversion and customer experience.
‘In addition, the group continues to evaluate and execute acquisition opportunities as it seeks to deliver its core strategic objective of growth.’
To this effect, Vertu is engaging in a multi-franchise strategy, which has seen it acquire Toyota franchises covering the west of Scotland, Loughborough and Leicester, along with franchises belonging to Honda Bikes, Citroen and Vauxhall.
More recently, the business bought the freehold and long leasehold interests of a site in Derby, where it operates four franchises selling cars built by Nissan, Skoda, Renault & Dacia and Peugeot.
Vertu Motors shares had risen 4.7 per cent to 55.6p during the late afternoon on Wednesday, although their value has plunged by over 22 per cent since the start of the year.