Vertu Motors has delivered an adjusted profit before tax of £7.4 million in July after post-lockdown trading has been “significantly stronger than envisaged”.
The dealer group introduced a 0% finance used vehicle sale at the majority of its dealerships in England and also made 345 redundancies last month in order to ‘future proof’ the business.
The 6% cut to Vertu’s headcount is expected to save the business £10m in ongoing annual costs.
Vertu incurred an adjusted loss before tax of £5.2m in the March to June period and so has now made a year to date adjusted profit before tax result of £2.2m.
Robert Forrester, Vertu chief executive, said: “July trading continued the trends seen in June and was significantly stronger than both what we envisaged and the group’s original business plan for the month.
“A robust recovery in customer demand for our vehicles and servicing has continued, aided by our investments in omnichannel retailing.”
The July profit result was ahead of the prior year and included £1.3 million in monies received from the Job Retention Grant.
Vertu is expecting that its remaining furloughed employees will be back at the business by the end of August.
Vertu generated record levels of used vehicle gross profit in July with like-for-like volume growth of 13.7%. Used vehicle margins remained above normal levels.
National retail new car registrations saw the first meaningful year on year uplift for 17 months.
July saw group like-for-like volumes of new retail cars up 18.1% and order take for the crucial September month is currently running over 20% ahead of last year.
The UK fleet market in July was subdued, particularly key segments such as corporate contract hire and daily rental.
Forrester said the market was boosted by activity in the significant Motability segment reflecting pent up demand. Group Motability like-for-like volumes in July were up 37.9% as a result.
Aftersales demand continued to be strong and is above normal levels with July delivering an 11.2% year-on-year uplift in core group service gross profit.
Forrester said: “The group is in a significantly better position than anticipated during the lockdown, both in terms of profitability and cash flow generation.
“Consumer demand has been stronger than initially anticipated and we took steps to ensure the group maximised its cash liquidity, despite the already strong balance sheet position.”
Forrester said that while much of management’s time and energy was focused on navigating the business through the immediate effects of the pandemic, time was also invested in the improvement of Vertu’s systems and omnichannel retailing capability.
Vertu is looking at potential acquisitions to grow the scale of its franchised dealer operations centred around key manufacturer partnerships.
Forrester said: “I would like to thank colleagues for their continued enthusiasm and commitment in delivering this great result while ensuring all our sites have remained safe for both customers and colleagues.”