Things seem to be motoring along just fine for Britain’s car dealers. Low interest rates are underpinning some very generous finance deals, new models are drawing in curious punters and fuel costs are easing.
Vertu added to that feel-good factor yesterday with a record outcome for the first half of the year. At almost £1.1 billion, revenues were up by getting on for a third with pre-tax profit jumping nearly 50 per cent to £12.8 million. Shareholders are to be rewarded with a double-digit hike in the interim dividend.
Much of the bumper performance has been driven by recent takeovers. Just eight years after setting off down the acquisition trail as a cash shell, the group can lay claim to being the UK’s sixth largest car retailer with 111 outlets, encompassing the Macklin Motors brand north of the Border.
Chief executive Robert Forrester shows no sign of taking his foot off the gas, flagging a strong acquisition pipeline that is likely to include further dealerships north of the Border.
Standout areas in the latest period, perhaps tellingly, were used car sales and servicing – a scenario that Vertu’s rivals have also highlighted. The rush to get behind the wheel of the latest model has created a pool of second-hand vehicles that is proving attractive to the canny buyer. Others, with less cash to burn, have simply been looking to keep their existing vehicles on the road.
The industry has experienced a remarkable turnaround since the dark days of the credit crunch when measures such as the car scrappage scheme were necessary to prop up trade. Within the context of the wider European market, Britain is firmly in the car sales fast lane. Last week’s industry data showed that 425,861 registrations took place last month, a year-on-year rise of 5.6 per cent and the biggest September total in a decade. It also marked the 31st consecutive monthly increase reported by the Society of Motor Manufacturers and Traders. Gains among Scottish dealers were a little more muted but stable.
The economic fundamentals still look largely positive – record low interest rates, low inflation, rising employment and falling unemployment. Buyers will continue to come forward, particularly with new models on tap.
However, industry bosses – including Vertu’s CEO who warns of possible fallout from the latest eurozone malaise – are right to remain cautious. In growth terms, the market for new cars may have seen its zenith.
US chip firm bags peer for a pretty penny
British chip designer CSR has been at the cutting edge of Bluetooth technology for some time.
With the market for wireless connection mushrooming, the £1.6 billion paid for it by US peer Qualcomm may turn out to be a bargain.