Vertu warns that buyers are not turning to electric cars because supply is outstripping demand
- Vertu posted a 6.3% decline in comparable used vehicles for the first half
- New car sales rose, but the dealer said supply of electric cars exceeded demand
Buyers are failing to buy new and used electric cars, Vertu Motors warned, as supply of battery-powered vehicles exceeds demand and prices fall.
Vertu said that despite a drop in used car sales in the first half of 2023, the company remains “positive” as the company is unable to offer zero percent financing due to rising interest rates.
The car dealer group said used car prices have remained stable due to limited supply, “with the exception of used electric vehicles, which have been impacted by a significant increase in supply in the used market.”
However, Gateshead-based Vertu also said trading profit was up year-on-year thanks to the Helston acquisition completed in December.
In the first half of the year, like-for-like sales of used cars in the car dealership increased by 6.3 percent
Vertu said used vehicle sales on a like-for-like basis fell 6.3 percent in the five months ended July 31. The company attributed this to fewer financing options and a ‘change in approach’, as well as an ongoing shortage of used vehicles’.
The Covid pandemic and recovery years have been marked by a shortage of new cars as lockdowns and a shortage of computer chips hampered production, followed by the impact of the war in Ukraine.
The revival in car supply has led many dealerships to find they have more new electric cars than private buyers want, leading to price cuts.
Vertu said: “Recently increased supply of new electric vehicles appears to be outstripping retail demand, leading to an imbalance in pipeline stocks coming into the key plate change month of September.”
“Manufacturers are responding by offering discounted pricing and assisted financing rates to fuel retail demand.”
“The demand of the fleet sector for electric vehicles remains robust and is currently of crucial importance for the electrification of the vehicle fleet.”
Vertu Motors shares fell 1.1 percent to 68.2 pence in early trade.
Robert Forrester, chief executive of Vertu Motors, said: “Trade remains positive.”
“Once again, the entire Vertu team has put in hard work and dedication and I want to thank them all.”
“Used car prices have remained stable and we have gained market share in the new car market.”
“The performance of our high-margin after-sales business continues to be strong.” The integration of Helston Garages remains on track to deliver the planned synergies.
“The board remains optimistic about the future. We expect full year results to be in line with current market expectations and we are excited about the opportunities that our expanded portfolio will create for Vertu Motors.”
The company also noted that in the first half of the year it was able to “increase vehicle inventory to ensure future sales volumes are maximized.”
The dealership said it has continued to buy back shares, repurchasing about 7.4 million shares, equivalent to 2 per cent of starting shares in the year to date, at a total cost of £4.8million.
> The 10 fastest depreciating used cars revealed — and they’re all electric
In May, a study by used-car selling platform Motorway found that the value of some used SUVs and city cars has risen nearly 30 percent over the past two years, thanks to a combination of high demand and low inventory.
It has also been found that cars that can be used for trade, such as vans and private hire vehicles, are in high demand among dealers and can fetch good prices if sold in good condition and with relatively low mileage over their lifetime.
But even as average used car prices continue to skyrocket, the value of some models has fallen by more than a quarter in the last 12 months.
Electric cars were the biggest price detractors as a combination of factors pushed electric car valuations lower, including a rising stock of used vehicles, an increased supply of show-fresh cars and wage cuts through tax incentives for new purchases.