Scrappage drives North East firm Vertu Motors ahead

Feb 25 2010 By Karen Dent, The Journal

NEWCASTLE motor group Vertu is gearing up to reveal bumper profits thanks to the success of the scrappage scheme.

Vertu, which has 59 dealerships and two service operations mainly run under the Bristol Street brand, says it is confident of reporting better than expected profits when its annual results for the year to the end of February are published in May.

And Vertu, which has taken over 14 dealerships since last March and is Britain’s 13th biggest motor group, is aiming to continue its rapid expansion by snapping up more suitable rivals when they become available.

Vertu’s new car sales jumped by 18.6% between September and January on the back of a national leap of almost 68% in new car registrations as people took advantage of the Government’s money for old bangers scheme.

Scrappage means there are fewer used vehicles on the market and Vertu’s second hand sales fell by 9% between September and January. The snowy weather led to almost 60% of the reduction happening last month as potential buyers stayed at home but the lack of supply meant used car prices remained strong.

Commercial and fleet car sales also dipped, reflecting the national picture which has seen business buyers tighten their belts in an effort to survive the recession.

Vertu said a number of issues meant the outlook for the rest of this year was "uncertain".

"The ending of the scrappage programme, January's rise in VAT, the introduction of the new car ‘showroom’ tax in April and continued strength in the euro against sterling all indicate that new car sales to private customers will decline over the remainder of the year," it said.

"The fleet, used car and aftersales areas are likely to be more resilient in the coming period."