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Vertu Motors predicted that lengthy ready instances for brand new vehicles would “cushion” the business from an financial slowdown within the brief time period, because the dealership group raised revenue expectations for the 12 months due to greater costs.
The UK’s fourth-largest automotive seller by gross sales mentioned earnings could be forward of expectations after a “very patchy” provide of recent vehicles stored costs for first and second-hand fashions artificially excessive.
A worldwide scarcity of semiconductors has compelled world automotive producers from Toyota to Volkswagen to curtail manufacturing, resulting in ready instances of as much as a 12 months for some fashions.
Though shortages started through the top of the pandemic, the business continues to be dealing with stoppages and manufacturing halts after two years.
The pattern has pushed up the value each of recent fashions and second-hand vehicles, as extra shoppers switched to used autos.
“We haven’t seen a major enchancment in new automotive provide,” mentioned Vertu’s chief govt Robert Forrester. “It was risky, and really patchy.”
Margins on new vehicles remained greater than common, he added, whereas the shortages meant that “used-vehicle costs are much more sturdy and resilient than they was”.
In addition to driving up costs, the shortages and lengthy ready lists are anticipated to cushion carmakers and dealerships from an anticipated slowdown in client demand brought on by financial headwinds and rising rates of interest.
Rising charges are a “potential concern from an affordability standpoint”, Forrester mentioned, including that lengthy ready lists would “cushion” the business from the impression.
Vertu’s pre-tax earnings for the six months to July had been £26.9mn, 40 per cent decrease than in the identical interval a 12 months earlier, when the squeeze on new fashions was much more acute. Gross sales within the six months rose 4 per cent to £2bn.
The corporate introduced a £3mn share buyback on Wednesday. Its shares had been up 6 per cent in early afternoon buying and selling.
Forrester warned that greater prices — notably wages — had been more likely to have an effect on the group within the months forward.
The corporate has put aside about £100mn for acquisitions, and mentioned it had a “pipeline” of offers lined up. The sector, which has at all times been fragmented, is seeing a wave of consolidation, with bigger rival Lookers now part-owned by Constellation, which took listed group Marshall Motors non-public final 12 months.
Vertu’s smaller rival Pendragon is dealing with a takeover bid from Hedin, a European automotive seller group the place Vertu’s former boss Trevor Finn is a director.
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