Vertu Motors has reported increased revenue but a drop in profits in its latest full-year financial results.
The AM100 dealer group’s results for the year ending February 28 2026 show revenue of £4.83 billion, up from £4.76 billion in the previous year.
However, adjusted profit before tax of £24.5 million is down by £4.8 million year-on-year.
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In its results, Vertu states that this profit – which it notes is slightly ahead of analyst expectations – was delivered despite “weak new vehicle markets”, which it attributes to the UK Government’s ZEV mandate and “related margin pressure”.
ZEV mandate ‘getting worse’
Robert Forrester, CEO at Vertu Motors, has previously discussed difficulties caused to the new car market by the ZEV mandate, and speaking to Automotive Management about the newly published results he said the effects were worsening.
He said: “It’s got worse, because the target’s gone up. And next year it will get worse because the target is going up.
“Ultimately, I’m a little bit more relaxed on the ZEV mandate because the reality is dawning, and there will have to be moderation and change: move the targets out to 2035 or 2040, align more with the European Union, just bring reality back into the world.
“From the discussions that I’ve had, there is a recognition, certainly in the business department of the Treasury, that economic growth and activity is being curtailed, and there’s too much pressure on the automotive sector.
“I think government gets it. But having had a very vocal strategy, government might find it quite difficult to row back. But they’ll have to – and they know, I think, that they’ll have to.”
Forrester said that a reduction in Vertu’s workforce by nearly 600 employees in the past 24 months could be attributed to the ZEV mandate, “aided and abetted” by increases in the National Minimum Wage and National Insurance.
He said: “I think we could have probably weathered National Minimum Wage and National Insurance a lot better had we not lost £20 million of new car profitability in the past 24 months.”
Acquisition opportunities and aftersales success
Despite the pressures, Forrester says Vertu is well placed to take advantage of opportunities that could be presented by a consolidating sector. The group has reported a reduction in net debt by £5.3 million to £61.3 million, and “robust” cash generation, with £30.7 million of free cash flow.
Forrester said: “We have a very strong balance sheet, which we will use at some point to consolidate more and buy more assets.
“Whether the time’s right with the economic uncertainty, with the ZEV mandate in place, is debateable, but I think there is some evidence that people are going to struggle going forward, especially if they’ve got lots of debt, and therefore there could be some interesting opportunities for us.
“We’ve got scale now, but I think we’ve got the management, the financial capability, the systems capability, the ambition to do more. It’s a question of timing and buying the right assets. A question of price, franchise, geography, all these things.”
A highlight of the group’s financial performance is aftersales, which has seen like‑for‑like revenue and gross profit growth and now generates more than 46% of the group’s gross profit.
Forrester said: “Aftersales clearly underpins our earnings. If we did not grow those aftersales profits, the numbers would have been back a lot more.”
Forrester highlighted efficiencies including the closure of many service departments on Saturdays, and highlighted an upsurge in demand for tyres attributed to worsening road surfaces.
He also said the group’s strategy relating to SMART repair and margin management had led to increased profits from accident repairs, despite reductions in the number of accidents due to the increased rollout of ADAS.
JLR losses mitigated and Chinese brand expansion planned
The group had previously warned of a financial impact from last year’s JLR cyber-attack, defined in the results as being worth £3.9 million – however this was mostly covered by insurance proceeds of £3.4 million.
The results also note “modest” used car profit growth, with pricing stability and stable gross profit per unit.
The group has also reported strong trading in March and April, said to have been ahead of the same period in 2025.
Vertu is also planning to continue a programme of adding Chinese brands to its portfolio, with Jaecoo, Omoda, Lepas, Chery and Leapmotor announced as new additions.
When asked if these additions would replace other manufacturers in Vertu’s portfolio, Forrester said: “I think it’s a gradual replacement, but not a total replacement. It’s more a rebalancing.
“Chery’s brands have set off exceedingly well in the UK. We’ve got good relations with them. We’re now actively putting those brands into some dealerships.
“We have no plans to exit any of the existing franchises we’ve got.”