The chief executive of motor retailer Vertu has hailed unprecedented trading conditions as the firm posted record sales and profits, but warned that tougher times are on the horizon.
Continuing demand for both new and used cars has delivered positive tailwinds for the Gateshead-based group, saw adjusted pre-tax profit surge to £80.7m in the year to February 28, 2022 - a 228% increase from the £24.6m in 2021.
The firm – which trades under the Bristol Street Motors, Vertu Motors and Macklin Motors banners – now runs 160 franchised dealerships and aftersales outlets across the country and saw revenues climb to £3.6bn from £2.5bn.
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Chief executive Robert Forrester toasted the strong results, but warned of potentially tougher times to come as inflation and rising energy costs bite into the UK economy.
He said: “The group performed at record profitability levels in the year. Undoubtedly aided by well-publicised sector tailwinds, the group executed well, gained share, strengthened its foundations, positioned itself for the transition to EV and displayed fundamental growth, all aided by its investment in the Click2Drive technology platform.
“We’ve flagged that there’s clearly a risk. If people’s real wages are under pressure due to inflation, spend on everything will go down and cars could very well be part of that and that’s something we’ve got to be cognisant of. We’ve been through that dynamic before. We’ve obviously got to watch our own cost base in terms of energy and general inflation, and that’s going to be one of our key battles.
“I am incessantly boring people to death with the mantra of ‘cost, conversion and customer experience’, because our business will have to work hard to continue to be successful. It’s a competitive marketplace and I think the market conditions won’t be as rosy as they were over the last 12 months, which were unprecedented. For used vehicles to keep going up in price is unheard of. The last three months prices have come back to more normal times, so we’ve got to go back to basics.”
Vertu has 6,000 employees in total with around 500 staff across its three head office buildings on Team Valley, Gateshead, where Mr Forrester says the combination of technology and centralised processes is giving massive value to the business.
The group has 500 more people now than it had 12 months ago, through acquisitions and job creation, but it also has 500 vacancies and Mr Forrester said recruitment continues to be a challenge.
He said: “We’ve got links to universities and do a lot of work with Northumbria University but there’s a real shortfall of trained people, particularly in the North East in areas like data analytics, search engine optimisation. We’re taking on apprentices and training our own and trying to recruit. We’re taking on 200 apprentices this year.
“We have signing on bonuses for technicians, we’ve enhanced maternity pay significantly, now we have enhanced holidays linked to long service and we’ve done a thorough pay review to make sure we’re competitive.
“But there’s a trained labour shortage in the UK which is going to take quite a while to sort itself out. I would certainly like to run with less vacancies than I’ve got. For example, I’m going to create four more jobs in my recruiting department to try to sort out the recruiting problem, which is irony isn’t it?
“But I think Gateshead is a real gem and when manufacturers come up from the south to look at what we do in Gateshead they are quite amazed at what gets done here.”
Looking ahead, he said Vertu is continuing to grow, and that it aims to further develop its portfolio of manufacturers.
Sales of electric vehicles at Vertu, which marked 15 years in business last year, are also increasing and last year they exceeded national average, growing by 166% compared to around 125%, and the firm has also made investments into increasing its own EV infrastructure. Last year it spent £500,000 on aftersales capabilities and charging and a further £1m is planned in the next 12 months, and Vertu now has 21 dealerships - more than any of its rivals - approved under the Government’s Electric Vehicle Approved scheme.
He added: “We’ve done a lot of work to make sure our business is ready for electrification, but there is a continued need to invest in charging infrastructure. One of the big impediments to that is it’s okay me putting chargers in, but if the local substation doesn’t have the electricity to give me, it’s a bit of a waste of time and I’m afraid the electric infrastructure of the powergrid, definitely when you get down to local levels, is very challenging. And the Government hasn’t really got much of an answer.”
