Vertu Motors bounces back with a £9m profit after dealerships reopened in June but still plans to cut jobs
- Private car sales across the UK fell by 19.2% in June, according to the SMMT
- Car showrooms in Wales and Scotland had to stay closed until the end of June
- Vertu Motors owns the Bristol Street Motors, Farnell and Macklin Motors brands
Auto dealer Vertu Motors said ‘strong’ demand for new cars following the reopening of its English dealerships helped them to register a £9million profit in June.
Sales of the Gateshead-based firm’s new retail cars rose by almost 1 per cent last month compared to June 2019 as the UK car market began a tentative restart following the relaxation of lockdown restrictions.
The company said demand might have been boosted by consumers saving more money during the lockdown period, the decline in public transport use and because Britons are planning to take more domestic holidays.
Auto dealers in England had a tentative restart in June after at least two months in lockdown
But despite the reviving car market, sales at Vertu, which owns the Bristol Street Motors dealership, remained significantly depressed as a result of the coronavirus. Fleet car sales fell by over half last month on a year-on-year basis.
Meanwhile, demand for commercial vehicles and used cars each dropped by 6 per cent, the latter of which was blamed on ‘tight’ supply in the market.
The broader car market saw a massive decline in car sales though even as net retail sales grew at Vertu, which also operates the Macklin Motor and Farnell brands.
According to the Society of Motor Manufacturers and Traders (SMMT), a car industry trade body, private auto sales across the UK fell by 19.2 per cent in June while commercial vehicle sales fall by around a quarter. Fleet car sales also slumped by 45.6 per cent.
It also said one in five automobile dealerships stayed shut in June even though English showrooms were allowed to reopen on the first day of the month.
In addition, Welsh and Scottish showrooms had to stay closed until the end of the month.
Vertu Motors, which owns the Bristol Street Motors dealership (above), saw its private car market sales plummet by 19.2 per cent, and commercial vehicle sales fall by around a quarter
‘June trading was stronger than we had expected,’ said the company’s chief executive Robert Forrester.
‘I would like to thank the team for their hard work and enthusiasm as well as for their efforts to ensure the dealership environments remain safe for customers and colleagues.’
Adjusted profits before tax climbed to £9million from a £14.2million loss in the previous three months. Forrester said the business was helped by having a ‘much stronger cash position’ than expected.
The AIM-listed group benefited to the tune of £4.2million from either furlough money or rates relief last month while also administering extensive efficiency savings.
Even before the Covid-19 pandemic brought car sales to a virtual halt, Vertu said Brexit had hurt its sales, because it caused the pound to fall and the price of imported cars to rise
This includes a fully ‘paperless’ vehicle sales process which allows patrons to sign for a motor vehicle by text message and a ‘buy online, reserve it now’ function.
Forrester warned though that Vertu intended to let go about 345 employees, or about 6 per cent of staff, as part of cost-cutting measures.
‘The Covid crisis has driven an acceleration of technology uptake, and we are embracing this trend to future-proof the business, he commented.
‘As automation progresses, we have made the difficult decision to reduce group headcount by 6 per cent, which contributes to £10million of on-going annualised cost savings being identified.’
Even before the Covid-19 pandemic brought car sales to a virtual halt, Vertu said Brexit had hurt sales, because it caused the pound’s value to fall and the price of imported cars and car parts to rise.
Its revenues still grew 2.8 per cent to £3.1billion in the year ending February 29, however. Adjusted operating profits also remained flat at £23.5million, and the firm added another 12 showrooms during the year.
Shares in Vertu Motors were up 3.7 per cent by the late morning to 23.6p.