North East retailer Vertu Motors is set to create more jobs at its head office after seeing record trading levels on the back of unprecedented market dynamics.
The Gateshead company has more than 150 dealerships around the 海角视频 under major brands – Bristol Street Motors, Macklin Motors and Vertu Motors – all of which are backed by TV campaigns, sports sponsorships and digital marketing initiatives.
Now the firm has issued unaudited results for the six months ended August 31, highlighting a record performance after being able to raise prices while demand for vehicles is soaring.
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Vertu bosses said that drivers have been happy to pay more, and also wait patiently for new cars amid the supply chain issues, having saved money during lockdowns, and that more workers are looking to drive to offices rather than take public transport.
New car supply has foundered due to the global chip shortages – which has also affected manufacturers’ 海角视频 operations including Sunderland’s Nissan plant – but Vertu said customers are “increasingly accepting of long lead times”.
Vertu posted pre-tax profits of £51.1m, compared with just £3.9m in the same period a year earlier during the height of the pandemic. Revenues rose 71.9% to £1.9bn.
As a result, full-year profits are likely to be more than £65m, above previous expectations of between £50m and £55m.
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A record trading performance was delivered in the key month of September alone, with a trading profit of £20m.
The company warned, however, that the supply constraints continue and cost pressures remain - particularly those related to staffing, which are set to increase by £12m.
The extra money for workers will be used to ensure employees do not leave at a time of high vacancy levels and wages going up across various sectors.
Growth was particularly strong in the used car market, with sales up 67.3% and by comparison, new vehicles were up 44.8%. There was also strong demand for aftersales services, adding to the increase in profits.
Vertu said: “The used vehicle market in the 海角视频 has experienced unprecedented market dynamics, resulting in record vehicle pricing levels. The reduced new and used vehicle market in lockdown, together with new vehicle production disruption due to Covid-19 and parts supply disruption (particularly semi-conductor shortages), has caused used vehicles to be in increasingly short supply.
“This tightness in supply has coincided with a period of strong customer demand for used vehicles. The reasons for this include increased savings levels by consumers during lockdown and the absence of alternative spending options (such as holidays), and also consumers wishing to avoid public transport.
“The benefits of the private motor car have been firmly re-established in the consumer’s mind, which is much to the long-term benefit of the group.”
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Looking ahead, the board said it estimates that based on conservative assumptions, Vertu has the acquisition firepower of at least £90m, but said it would “execute only the right opportunities to drive long term success and shareholder value.“
Chief executive Robert Forrester added: “The record profitability delivered in the period has undoubtedly been aided by very favourable used vehicle market conditions, however, this is a remarkable performance outperforming market trends. I am proud of the entire Vertu team for their adaptability and effort.
“It’s a strange situation because we’ve got supply constraints in new cars, so our new car sales are down in every channel, but that’s fed through into a much more balanced demand and supply, which means margins have been enhanced, and that’s led to enhanced profitability.
“That’s been seen across the entire motor retail sector but we’ve held our own. We’ve sold more new cars than the market trends, and obviously there’s significant supply constraints but we’ve managed to do well in finding used cars.”
Vertu recently announced the creation of 50 head office jobs and Mr Forrester said more will follow.
He added: “There’s a lot of things going on in Gateshead where we are setting up new job roles. From the end of October we’ll launch ‘personal shopping’ for online retailing, where if you try to buy a car online you can talk to someone in Gateshead via video or live chat or phone, and they can help you get a video of the car, talk you through and give you a personal shopping experience.
“So there’s new jobs being placed in Gateshead – and there will be another 50 created on top of that because I’ve got another business idea we’re going to execute in the next few months.
“In terms of the business we’re in good shape but we have to be cognisant that the market tailwinds have been very, very significant, the dynamics of demand and supply have significantly helped us.”
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