Vertu Motors says used car prices have recently started steadying

Vertu Motors revealed that second-hand car prices have stabilized in recent weeks after falling significantly last year.

Wholesale prices for used vehicles fell 10.3 percent between October and December amid growing supply in the market, continued high prices and rising interest rates that affected consumer demand.

In response, Vertu said it boosted used car stock turns and reduced inventory levels by more than £40m, helping to “significantly” reduce net debt.

The company also noted that margins had improved since January as it increased stock, while used car prices have been “more in line with seasonal norms.”

Consequently, its gross profit per unit of used vehicles has improved in recent weeks, after falling to £1,241 in the five months ending in January compared with £1,402 in the equivalent period a year earlier.

However, the business remains hit by weak demand for new cars, with like-for-like sales volume falling 5.1 percent amid widespread cost of living pressures.

This came despite significant financing and discount offers from car manufacturers and the UK new vehicle market achieving its best performance since the pandemic began.

Vertu warned that new car orders this month were “at levels” lower than those in March 2022, “as order banks have been satisfied and the UK moves towards a supply-driven market”.

Robert Forrester, Vertu’s chief executive, however said he was “pleased with the team’s performance in a rapidly changing market environment”.

Like other car sellers, Vertu’s trading took off about three years ago, when many Britons with excess savings began buying more cars again after pandemic-related travel restrictions were gradually eased.

Used vehicle prices skyrocketed significantly as a semiconductor shortage forced motor manufacturers to reduce production, limiting the volume of new vehicles coming to market.

As a result, Vertu achieved record annual turnover of £4 billion in 2022, although this was also partly due to the company making numerous acquisitions, including Helston Garages for £182 million in December 2022, its largest acquisition deal to date.

Headquartered in Gateshead, Vertu is one of the UK’s largest car dealerships, with 188 outlets across the country selling vehicles from 31 manufacturers including Audi, Jaguar Land Rover, Toyota and Volkswagen.

The AIM-listed company sells many products under the Bristol Street Motors, Macklin Motors and Vans Direct brands.

Vertu Motors Stock They rose 1.9 per cent to 68.8p just before midday on Monday.