Motor dealer bucks trend as profits rise (From The Northern Echo)

Motor dealer bucks trend as profits rise

9:50am Thursday 2nd September 2010 in

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A NORTH-EAST car dealership has increased sales and profits this year, despite fears that the end of the car scrappage scheme would cause the industry to stall.

Tyneside-based Vertu Motors, which predominantly trades under the Bristol Street Motors name, defied the doomsayers to record a 6.7 per cent leap in like-forlike sales in the five months to July, with used car sales up 5.2 per cent.

Vertu, which has 67 sales outlets nationwide including garages in Darlington and Sunderland, expects its halfyear profits will be “materially”

ahead, despite reports the UK car market had hit the skids.

The Society of Motor Manufacturers and Traders (SMMT) announced that new car sales had dropped 13.2 per cent in July, compared with the same month last year.

Vertu put its recent success down to not relying as heavily on the scrappage scheme as some of their competitors for new car sales while also expanding the servicing side of its business.

The latter has helped boost profits as an increasing number of drivers hang on to their existing motors – leading to demand for car parts and regular visits to the garage.

Vertu, the UK’s eighth largest motor retailer, saw its service and bodyshop sales rise 2.4 per cent and 2.1 per cent on a like-for-like basis.

Shares in the group surged by six per cent.

Despite the better-than-expected first half, the firm remained cautious over the remainder of the year.

Chief executive Robert Forrester said: “Following this encouraging start to the financial year, the group is in a strong financial position and has made significant strategic progress.

“However, the macroeconomic outlook continues to appear fragile and the board therefore remains cautious on the secondhalf trading outlook.”

Overall, new car sales volumes soared by 35.2 per cent in the five months to the end of July thanks to Vertu taking over eight new outlets, which also lifted used car sales by a quarter.

Vertu plans to further expand the operation, saying it was looking at a number of growth opportunities.

Car retailers were bracing themselves for a tough spell of trading following the end of the Government’s scrappage scheme earlier this year, which the SMMT said had accounted for a fifth of new car sales since its introduction.

Former Business Secretary Lord Mandelson had extended the programme until last March following pressure from retailers and manufacturers, but the coalition Government has announced no plans to re-introduce the programme.

Nearly 400,000 vehicles were scrapped under the “cash for bangers” scheme, in which new owners were given £2,000 for trading in pre-1999 cars.