Vertu hopeful of boost from Government’s £650m electric car grant

Car dealership Vertu has said first half profits are set to fall as the new car market remains under pressure, but expects the Government’s £650 million electric car grant to provide a boost to demand.

The group said like-for-like new car sales by volume edged 1.4% higher in the five months to August 31, though incentives to spur on sales in a tough market impacted profit margins.

It has seen demand for new cars impacted by the zero emission vehicle (ZEV) mandate, as well as a poor consumer backdrop.

But Vertu said new electric vehicle grants were set to help drive demand for these motors in the second half of its financial year, especially coming ahead of the all-important September plate change.

The recently-confirmed grant gives a discount of £1,500 or £3,750 off the purchase price of specific EVs, based on their sustainability criteria.

Cars must be priced at no more than £37,000 to be eligible.

Robert Forrester, chief executive of Vertu, said the group had “navigated a subdued consumer backdrop and continued uncertainty in the new car market caused by the Government’s zero emissions vehicle mandate”.

The firm is predicting first half profits will be lower against tough comparatives from a year earlier.

But Mr Forrester said annual profits remained on track, helped by “greater affordability in the new electric vehicle market with more sub-£20,000 new EVs available and a series of government grants to stimulate EV activity now in place”.

“Encouragingly, the September new retail order book is slightly ahead of last year and likely to benefit from the new grants regime,” he said.

Figures out separately on Thursday, from the Society of Motor Manufacturers and Traders, showed battery electric vehicles held a 26.5% share of the new car market in August, which was the highest monthly level this year.

Overall registrations of new cars fell by 2% last month, the figures show, with 82,908 new cars registered in August, down from 84,575 a year ago.

Vertu said its new car order book was “slightly ahead of the prior year as it heads into the important trading month of September which bodes well for a strong September trading result”.

Used car sales by volume grew “slightly” in the five months to August 31 despite supply shortages, according to Vertu.

Its after-sales business continued to perform well, with “significant” like-for-like gross profit growth, the group added.