Car dealership Vertu looks to get motoring post-lockdown

● Scottish Macklin Motors outlets still closed to buyers ● But group points to pent-up demand in marketplace

Vertu Motors, the car dealership group that trades as Macklin Motors in Scotland, said it was looking forward “with confidence” despite revealing combined losses of £20 million for April and May amid the coronavirus lockdown.

The group said it also saw underlying pre-tax profits slump to £5.9m in March – “well below” normal levels of profitability – as the Covid-19 crisis deepened and the UK was placed in lockdown. But Vertu noted that the April and May losses were “significantly” better than the lockdown deficit it first feared.

The firm, which has a network of 133 sales and aftersales outlets across the UK, said its car showrooms reopened across England on 1 June with physical distancing in place, with Scottish outlets expected to resume trading in “due course”.

Chief executive Robert Forrester said: “The year to 29 February 2020 was robust for Vertu, but now the Covid-19 crisis and impact are clearly the focus.

“I have spent the best part of 20 years getting people into motor dealerships and the last two months effectively keeping them out. We entered the lockdown with a strong balance sheet, minimal use of used car stocking loans and excellent relationships with our banks, all of which means we have sufficient liquidity to weather this crisis.”

He added: “One material consideration on future trading would be whether the UK government seeks to kickstart new car demand through an incentive scheme in partnership with the manufacturers. The introduction of an incentive programme may favourably change sector outlook in the short term.

“It is likely for a number of reasons that the UK market for used vehicles will recover quickly in the short term as movement restrictions are lifted. Pent-up demand, aversion to public transport and the increased staycations in the UK may all come into play here.”

The outlook came as the group posted statutory pretax profits of £7.3m for the year to 29 February, down from £25.3m the year before.

But Vertu said that on an underlying basis, full-year pre-tax profits were in line with expectations, dipping to £23.5m from £23.7m after taking costs linked to acquisitions and higher costs of car stocks. Like-for-like revenues rose 1.2 per cent over the year, it added.

Forrester added: “Due to the progress made in [the full year], our financial strength, omnichannel capabilities, trusted relationships with manufacturers and strong team and culture, we will emerge from this crisis with an improved market share as the competitive landscape evolves and attractive consolidation opportunities emerge.”

No final shareholder dividend has been recommended.