Vertu Motors’ first-half adjusted pre-tax profit rose 19% to £23.8 million, with growth across new vehicles, used vehicles and aftersales.
The car dealer group raised its full-year profit outlook for the third time following stronger-than-expected September trading.
It also outlined plans to add 11 Chinese brand outlets over the next nine months, taking its total to 31.
Statutory pre-tax profit increased by 24.1% to £24.2m for the six months to August 31, while revenue rose to a record £2.60 billion from £2.51bn.
Like-for-like gross profit increased by £10.9m, with growth across new vehicles, used vehicles and aftersales.
Stronger-than-expected September trading means Vertu now anticipates results for the year ending February 28, 2027 will exceed current market expectations.
Analysts’ consensus forecast for adjusted pre-tax profit stood at £26.5m before the announcement.
Robert Forrester, chief executive, said: “Gross profit growth was delivered across every channel, while maintaining firm control of costs despite ongoing inflationary pressures.
“The group has now delivered three upgrades to current year profits since the start of the financial year.”
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Aftersales and older used cars support growth
Aftersales generated more than 44% of the group’s total gross profit, with like-for-like gross profit increasing by £3.9m. Most of that growth came from servicing, supported by customer retention through service plans.
Vertu is enhancing technician remuneration to improve recruitment and retention and increase workshop capacity.
Like-for-like used vehicle sales rose 3.7%, supported by the Value Cars by Vertu proposition, launched in April to expand sales of older, more affordable vehicles.
Sales of cars aged seven years and over increased by 34.7%, accounting for almost 90% of used vehicle volume growth.
Value Cars achieved a gross margin of 15.1%, compared with 7.5% for standard used cars, while generating similar gross profit per vehicle at around half the average selling price. They also sold an average of 11.5 days faster.
Changes to sales executive pay packages in volume franchise dealerships helped improve sales performance and staff retention. Vertu is now extending those changes to its premium franchises.
Like-for-like operating expenses fell slightly as a proportion of revenue despite inflationary pressures. Further efficiencies are planned through digital tools, energy-saving systems and closer analysis of marketing returns.
Chinese brand network set to expand
Vertu’s new battery electric vehicle retail sales volumes increased by 125.6%, compared with market growth of 75.9%.
The group now operates 20 Chinese brand outlets and plans a further 11 over the next nine months. Its expansion plans include additional representation for BYD, Geely, Omoda and Jaecoo, alongside proposed outlets for Denza, Chery and iCaur.
Vertu said it was assessing further Chinese brand opportunities and acquisitions against its investment criteria.
However, it warned that the ZEV mandate continued to affect new vehicle pricing, sales channel mix and supply. It expects those pressures to persist into 2030, even if the mandate is revised following the current consultation.
September trading prompts outlook upgrade
September profitability exceeded both the previous year and the board’s expectations.
The comparison benefited from disruption caused by the JLR cyberattack a year earlier, although gross profit increased across all principal revenue streams after adjusting for that impact.
Vertu’s like-for-like new retail vehicle volumes were flat in September, against UK market growth of 13.9%. However, its performance over the quarter supported manufacturer bonus income, helping lift new retail and Motability gross profit.
Used vehicle volumes and margins also improved, while aftersales benefited from stronger wholesale parts performance.
The group remains cautious about consumer demand amid rising inflation and interest rates.