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Vertu shares plunge after fall in second-hand car prices

Used car prices have dropped in recent months (Gareth Fuller/PA)
Used car prices have dropped in recent months (Gareth Fuller/PA)

Shares in car dealership Vertu Motors plunged on Thursday as it warned shareholders that record price drops for second-hand vehicles would eat into its profits.

The cost of used cars has soared in recent years and in early September was approximately 20% higher than it had been at the start of 2021.

But in October and November that began to shift. Values fell by a record 4.2% in both months, the retailer said.

This is likely to make used cars more affordable for customers in the long run, Vertu said, but for now is eating into its profit.

These “negative external market factors” now mean that the company’s profitability will be lower than what analysts currently expect, Vertu told shareholders.

“The board considers that UK used vehicle values are likely to continue to weaken above historic norms in the near term,” the company said.

“Once the current pricing correction has eased, used car prices in the UK will be more affordable to the consumer and margins should stabilise.

“Reducing interest rates in the medium term would also aid affordability and provide a further stimulus to a market benefiting from increased supply.”

Shares had fallen around 23% shortly after midday on Thursday.

Chief executive Robert Forrester said: “The current consumer environment remains volatile and recent trends of sluggish new car retail demand and weakness in used car pricing are likely to persist for some months.

“Vertu remains very focused on delivering outstanding customer experience, tightly controlling inventory and being diligent on costs.

“The group has a strong balance sheet and long track record of operational excellence and financial discipline.”