Car dealer Vertu hails soaring used car market in profit upgrade

Car dealership chain Vertu Motors has issued a second profit upgrade in less than a month as bosses said the used car market continues to grow even faster than first thought.

Profits for the year are now likely to be between £50 million and £55 million, up from previous estimates of between £40 million and £45 million.

However, the company also warned that, despite the strong performance, uncertainty remains due to the pandemic.

Bosses said future restrictions and colleague absences could play a part.

Vertu added: “The current UK-wide labour shortages, high vacancy levels and upward pressure on employment costs remain a risk for the business.”

But the biggest concerns remain over supply issues in the new car market, with the entire industry suffering from a shortage of computer chips used in vehicles.

The lack of new vehicles is driving the used car market, however, with recent data showing sales of used vehicles at record highs.

Vertu said: “New vehicle order take for the key month of September is currently running in excess of prior year levels; however, there is a risk that well-documented new vehicle supply shortages will result in vehicle deliveries being delayed into future periods.

“As a consequence of reduced new vehicle supply, used vehicle supply may also be restricted in the coming months.”

Following the upgrade, the company said it will also reintroduce a dividend for shareholders and start a £3 million share buyback scheme.

Sanjay Vidyarthi, an analyst at Liberum, said: “August is typically one of the quietest months of the year, so to see this level of upgrade in such a short space of time points to remarkable market conditions, as well as strong trading by the company.”