Macklin Motors owner in record profits as car shortages continue
“SECTOR tailwinds” drove Vertu Motors to record profits during the year to the end of February as supply chain constraints pushed up prices for both new and used vehicles.
The group, which trades under the Macklin Motors name in Scotland, reported a 228 per cent surge in adjusted pre-tax profits to £80.7 million as the average retail selling price for used cars – the company’s main revenue driver, accounting for 44% of total sales – rose by 19% to £17,376. Group revenues were up by 42% at £3.62 billion.
However, the cost-of-living crisis poses threats as consumers adjust to the squeeze on disposable incomes. Vertu chief executive Robert Forrester said used car prices have fallen by 2% in each of the last three months, which should provide some relief to consumers and help maintain demand.
“Undoubtedly aided by well-publicised sector tailwinds, the group executed well, gained share, strengthened its foundations, positioned itself for the transition to EV (electric vehicles) and displayed fundamental growth, all aided by its investment in the Click2drive technology platform,” he said.
“The outlook will depend on the available supply of new vehicles and continuing consumer confidence. The group’s excellent financial position provides the resilience to overcome any economic slowdown and resources to continue to grow.”
Fresh off last month’s announcement of a £2m investment to expand its Macklin Motors dealership in Dunfermline with the addition of Vauxhall, Renault and Hyundai franchises, Vertu said further growth
opportunities are likely to “accelerate”. The group noted that it has “significant firepower” of approximately £90m to facilitate future expansion.
Macklin has also taken over Arnold Clark’s former Toyota territory in the west of Scotland and is creating four new dealerships to serve the brand. The first opened on April 1 in the Darnley area of Glasgow, with the next facility due to open in the autumn.
Group revenues in the first two months of the current financial year were 5.1% higher, delivering a trading profit of
£19.1m for the period. Like-for-like new vehicle volumes rose by 7.4%, slightly ahead of the market despite global supply chain shortages.
Used vehicle volumes fell by 12.9% during March and April, continuing the trend that began in the second half of last year as higher prices impacted demand. The used market has also been hampered by increased interest in electric vehicles, which are primarily available in new rather than used car channels.
The group launched its Click2drive brand in October 2021 supported by television advertising campaigns under the Bristol Street Motors umbrella, its main trading name in England. Click2drive is now available across all of the three main group brand websites of Bristol Street, Macklin and Vertu.
The group is the UK’S fifth-largest motor dealership with 160 locations across the UK, including 10 Macklin sites in Scotland representing various brands. In January it opened a new £5m multifranchise site in Edinburgh bringing its Kia and Peugeot dealerships together with its recently-acquired MG franchise.
Approximately 900 of the 89,000 used cars sold by Vertu last year were done in a completely contactless fashion, double that of the previous year. The company is investing heavily in AI processes and functionality to speed up consumers’ online experience.
Mr Forrester said the group is focused on controlling costs to mitigate inflationary pressures. Its fixed-price agreement for electricity ends in October, with current pricing in the energy market meaning Vertu will likely face higherthan-budgeted increases on the renewal of those contracts.
Mr Forrester added that shortfalls in the supply of both new and used vehicles in the UK are “likely to continue for some time”.
“Such supply constraints helped to underpin vehicle values and margins throughout March and April,” he said.
“Consumer confidence in the face of rising domestic costs is a critical determinate to continuing success, both in terms of demand and used vehicle pricing trends. Management is focused on operational excellence around cost, conversion and customer experience and the delivery of the group’s strategic objectives.”
The outlook will depend on the supply of new vehicles and continuing consumer confidence