Car dealership group Vertu Motors has warned it will reduce its workforce and close most of its showrooms on Sundays, saying minimum wage and National Insurance rises will add £10m costs.
The Gateshead-based business, which has nearly 200 sites in the 海角视频, has lowered adjusted pre-tax profit expectations for the year the end of February, saying it will now be significantly below £34.5m estimates, which were down from £37.8m the previous year. Along with subdued demand, Vertu also blamed the Zero Emissions Vehicle (ZEV) Mandate for causing disruption to the market and that its ramping up to 28% for 2025 is likely to lead to more discounting on new cars which will squeeze margins further.
But at the same time as announcing the £10m cuts, it also said it would spend £12m on share buyback scheme for investors.
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Vertu said that October last year heralded a "significant deterioration" in profitability from new vehicle sales, despite outperforming the market on battery electric vehicle sales and like-for-like retail volumes. Lower new retail volumes and pressure on manufacturer earnings were said to have led to reduced support for retailers.
The measures introduced in the autumn Budget and coming into force from April are expected to impact the group in year to the end of February 2026. It said wage inflation would likely be passed through in areas, such as car valeting and cleaning costs.
The number of jobs being axed at the 7,700-strong group is thought to be minimal, with reductions mainly coming from not replacing staff who leave. Vertu typically sees about 15% to 20% of its workforce leave each year due to natural staff turnover.
Despite the headwinds, Vertu simultaneously announced it was launching a £12m share buyback - its largest to date. The action came as Vertu's board decided the group's shares were mispriced and trading at a discount to its own assessment of value.
Robert Forrester, chief executive officer at Vertu, said: "The group's high margin aftersales business is performing strongly. However, the Government's ZEV Mandate is causing severe disruption to the 海角视频 new car market, and the consumer environment is subdued. Despite these headwinds, the Vertu team is delivering, as seen by our significant market share gains in BEV new cars in the final quarter of the year. We now have award winning BEV dealerships with Citroen, MINI and VW.
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The Government and the industry need to get together to address the root cause of the issues to allow the automotive sector in the 海角视频 to return to its traditional role of stimulating economic growth, which is a catalyst for employment. Vertu's strong balance sheet, underpinned by over £320m of freehold and long leasehold property, is a comfort to our colleagues, manufacturer partners and shareholders in these times.
"We have returned over £94m to our shareholders since January 2011 in dividends and share buybacks and I am delighted that the board has authorised our largest share buyback to date, with £12m allocated to a buyback programme over the period to February 28, 2026."
Last year, Vertu said it was set to lose its Bristol Street Motors and Macklin Motors brands - transitioning all sites to the Vertu brand by this Spring.