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Vertu Motors has issued a profits warning following ‘significant’ reductions in wholesale used car values.
It cited Cap figures showing values fell 4.2% in both October and November with sharper cuts for premium brands of 7% to 11% each month.
It cut prices to maintain stock turn and used volumes fell 2% for the three months to November compared to a cut of 5.7% in the first half. Gross profit from used cars sales was lower than anticipated.
It said new vehicle supply now exceeded demand, which increased manufacturer stocking interest charges significantly above expected levels.
Aftersales demand remained strong and higher technician resource levels are helping to drive increased revenues. The current consumer environment remains ‘volatile’.
Robert Forrester, CEO of Vertu, said: “The current consumer environment remains volatile and recent trends of sluggish new car retail demand and weakness in used car pricing are likely to persist for some months.
“Vertu remains very focused on delivering outstanding customer experience, tightly controlling inventory and being diligent on costs.
“The group has a strong balance sheet and long track record of operational excellence and financial discipline. These attributes mean we remain very confident in our ability to take advantage of these challenging market conditions and the resulting increased opportunities in the sector.”