Vertu Motors says car prices have stablised after 10% falls towards end of year

04 March 2024 , 10:51

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Car dealership Vertu motors has said used vehicle prices have steadied after hefty falls (Image: PA Archive/PA Images)

Car dealership Vertu Motors has said prices of used vehicles have steadied after hefty falls, but caution is still needed as buyer uncertainty affects demand for new models.

Between October and December, the company saw a 10.3% drop in used car prices following steep gains in previous years. This fall was expected to impact profits, the firm warned in December, while also suggesting it might make cars more affordable.

According to its most recent update, used car prices have "stabilised in recent weeks following post-October wholesale pricing correction" and are now at typical seasonal levels. Between September 1 and January 31, it reported a modest increase in like-for-like sales - a rebound from a 5.7% drop in the first half of its financial year.

However, the new vehicle market continues to struggle with like-for-like sales down 5. 1% in the five months to the end of January due to cost pressures on consumers and car makers offering incentives and discounts to stimulate demand. Vertu said: "The group's new vehicle order-take for the important plate change month of March is currently tracking at levels below prior year level as order banks have been satisfied and the UK moves to a supply push market."

It also highlighted potential uncertainties for the new retail market caused by these trends. Robert Forrester, the boss of Vertu Motors, said they're having to change with a "fast-changing market backdrop, with used vehicle prices now stabilised at lower levels and consumer uncertainty impacting retail demand for new cars".

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Vertu shared that profit margins from used cars have started to get better since January, as they've added new stock. They said: "The group has worked hard and proactively to increase used vehicle stock turn and reduce overall inventory levels. Consequently, in recent weeks, improved used vehicle gross profit per unit has been generated by the Group."

The group thinks that full-year underlying pre-tax profits will be "broadly" the same as recently lowered market expectations. Overall group revenues went up 7. 8% in the most recent five months thanks to a stronger performance from its after-sales business, mobility sales and also cost cutting actions.

Lawrence Matheson