Vertu Motors (VTU) Trading Update summary

Trading performance and market environment

• Adjusted profit before tax for FY25 expected to be significantly below market expectations due to new car market dislocation.

• Like-for-like retail volumes and BEV sales outperformed market trends, but UK new retail channel volumes hit a 25-year low.

• Record fleet sales and heavy discounting of new cars led to margin pressure; used car gross profit exceeded prior year but margin expansion was less than anticipated.

• ZEV Mandate ramp-up to 28% in 2025 expected to drive further discounting and margin pressure in new cars.

• Aftersales trading remains resilient and ahead of prior year.

ZEV Mandate and market disruption

• 2024 saw the first year of mandated ZEV targets, prompting manufacturers to offer significant BEV discounts, estimated at over £4.5bn.

• BEV registrations rose to 19.6% of total sales, below the 22% target; fleet sales drove overall growth but private retail sales fell 8.7%.

• Consumer hesitation, affordability issues, and limited petrol/diesel availability contributed to the weakest retail performance in 25 years.

• Retailer and manufacturer profitability in new cars declined, especially in Q4 2024.

• 2025 expected to bring further pressure as BEV mix targets increase and consumer confidence remains low.

Used car and cost management

• Used car market saw stable wholesale prices but subdued retail demand, limiting margin expansion.

• Used car profitability increased year-on-year in H2 FY25 due to trade value stability.

• Autumn Budget changes to minimum wage and NIC will add £10m to labour costs in FY26; cost actions including headcount reductions and Sunday closures will fully offset this.

• Up to £4m in exceptional restructuring costs expected in FY25.