Vertu Motors Trading Update: Used Cars and Aftersales Offset New Car Market Pressures

Vertu Motors FY26 guidance intact as used cars and aftersales do the heavy lifting

Vertu Motors has posted a steady-as-she-goes trading update for the five months to 31 July 2025. The headline: full year FY26 adjusted profit before tax is expected to be in line with market consensus. That consensus, compiled by the company, sits at £27.2 million (range £26.5 million to £27.5 million).

What kept the show on the road? Solid used car performance, a strong aftersales engine, and tight cost control offsetting a wobbly new car market. With EV grants now in play and more sub £20,000 new EVs arriving, management is cautiously upbeat on the all-important September plate-change month – the retail order book is slightly ahead of last year.

Key numbers and trends at a glance

Metric	Update
FY26 adjusted PBT outlook	In line with consensus (£27.2m; range £26.5m-£27.5m)
New retail LFL volumes	+1.4% (market private registrations +4.4%)
Motability volumes	-21.7% (market -19.8%)
New car margin (Core Group)	8.0% (2024: 7.8%)
Fleet car volumes (LFL)	+13.6%
Commercial vehicle volumes	UK market -9.0%; Group LFL -4.1%
Fleet & commercial margin (Core Group)	5.1% (2024: 5.3%)
Used cars	Volumes slightly ahead; LFL gross profit up; margins stable
Service gross margin (Core Group)	73.6% (2024: 72.5%)
Operating expenses (LFL)	Level with last year
Share buyback	£6.4m of £12.0m authority used, 9.4m shares repurchased
Cumulative buybacks since 2017	Over £41m; shares in issue reduced by over 19%
Property disposals	£3.3m proceeds from sale of surplus properties

Notes: “Core Group” refers to dealerships trading in both March-July 2024 and March-July 2025. The ZEV mandate sets manufacturer targets for the proportion of new cars that must be zero-emission. Motability is the UK scheme enabling eligible disabled people to lease a new car.

Used cars: limited stock, steady margins, and a July sales kick

The used market remains a story of two halves. Three-to five-year-old cars are scarce due to prior new car supply constraints, but there’s a growing flow of nearly new cars from pre-registrations and daily rental. Despite those cross-currents, Vertu nudged volumes above last year and kept margins stable across the Period.

The Group credits a successful ten-day sales event in July and its Insights pricing algorithm. Importantly, used car values have been “remarkably stable” industry-wide, which underpinned like-for-like gross profit growth. The slight negative: aggressive new car offers, especially on premium brands, are putting pressure on the margins of younger used cars – manageable so far, but a watchpoint.

Aftersales: margin-rich and still growing

Aftersales did the heavy lifting again. Service gross margin rose to 73.6% (from 72.5%) on stronger labour sales, better execution of vehicle health checks, and greater uptake of the Group’s Pay Later product. Pricing actions, taken to offset cost inflation, also supported profitability.

This high-margin engine gives Vertu resilience. When new car demand softens, aftersales tends to cushion the blow, and that’s exactly what we’re seeing.

New cars: ZEV friction, softer consumer confidence, but a better mix

Despite market private registrations growing 4.4%, Vertu’s like-for-like new retail volumes rose 1.4%, with management suggesting the headline market was flattered by pre-registrations and tactical activity. That environment also squeezed retail margins, although Vertu’s new car margin in the Core Group actually improved to 8.0% due to mix – fewer lower-margin Motability sales.

Motability was the weak spot, with volumes down 21.7% against a tough market backdrop (-19.8%). For H2, Vertu expects Motability to stabilise as comparatives ease, and it should also benefit from the new EV grants programme that began in mid-July.

Fleet and commercial: fleet strong, vans tough

Fleet car volumes were up a robust 13.6%, helped by continued EV appetite in the corporate channel. On the flip side, UK commercial vehicle registrations fell 9.0% in the Period, and Vertu’s like-for-like volumes were down 4.1% – still a market share gain.

Combined fleet and commercial margins nudged down to 5.1% (from 5.3%) as the Group prioritised volume to manage manufacturer stocking charges. Sensible in this market, but it does trim margin.

Costs, cash, and capital allocation: disciplined and shareholder-friendly

Keeping like-for-like operating expenses flat is a quiet triumph given April’s increases in minimum wage and National Insurance. Energy and vehicle running costs came down, and Vertu is investing another £900,000 in solar panels across its freehold estate to push energy costs lower again.

On capital allocation, the share buyback continues at pace: £6.4 million of the current £12.0 million authority used to 31 August, repurchasing 9.4 million shares. Since 2017, buybacks total over £41 million, cutting the share count by over 19% – mechanically supportive for earnings per share. The Group also realised £3.3 million from selling surplus properties, adding to financial flexibility.

FCA motor finance update: uncertainty, but initial burden expected on lenders

The Supreme Court dismissed claims of bribery and fiduciary breaches by retailers, while upholding one Court of Appeal decision on unfair relationships on the facts of that specific case. The FCA will consult in October 2025 on a redress scheme, with consumer payments expected to start in 2026.

Crucially, while details are not disclosed, redress is expected to be initially levied on lenders rather than motor retailers. Vertu is not currently making provisions and will update investors as clarity improves. Sensible, but this remains a sector overhang to monitor.

Strategic moves: EV tailwinds and a bigger bet on BYD

With the UK introducing new EV grants in mid-July and more sub £20,000 EVs arriving, Vertu expects improved H2 demand, notably in September. Some buyers deferred purchases in July and August pending grant details, so there’s potential pent-up demand.

On the portfolio, Vertu will open three new BYD outlets by 1 November in Hartlepool, Macclesfield and Morpeth, taking the BYD network to five. Management clearly expects Chinese OEMs to grow UK share. There’s also a refranchising move in Nottingham, shifting from Citroen to Skoda, and continued estate optimisation through property sales.

My take: steady execution, with H2 set-up improving

• Positives: Aftersales strength, used car stability, cost control, and ongoing buybacks. September order book slightly ahead is encouraging, and EV grants should help unlock demand.
• Negatives: Motability weakness, margin pressure from new car discounting on younger used stock, and ongoing ZEV mandate friction. H1 profits will be lower year-on-year.

Overall, this reads as disciplined execution through a choppy market. The balance sheet is described as strong with low gearing, the leadership team is stable, and capital is being allocated with discipline.

Outlook: guidance held, eyes on September and EV grants

FY26 adjusted PBT is expected to land in line with consensus. Used volumes and margins are anticipated to remain stable, aftersales momentum is positive, and September – which underpins H2 profitability – is set up slightly better than last year.

Key dates: interim results for the six months to 31 August 2025 will be reported on 8 October 2025. Between now and then, watch for evidence that EV grants are pulling retail demand forward and that Motability stabilises as expected.