- Shares in the owner of Bristol Street Motors were down 23.8% by late afternoon
- The company blamed the forecast on a 'number of negative external market factors'
- The value of used cars in Britain fell by an average of 4.2% in October and November
Vertu Motors shares fell on Thursday after the retailer warned that full-year profit was likely to miss market expectations.
Shares in the owner of Bristol Street Motors were down 23.8 per cent to 64.6 pence by early afternoon, making them one of the top five decliners on the Aim All-Share Index.
The Gateshead-based company blamed the lowered forecast on a 'number of negative external market factors' that affected the group during the three months ending November.
Be careful!: Shares of Vertu Motors tumbled on Thursday after the retailer warned full-year profits were likely to miss market expectations
The value of used cars in Britain fell by an average of 4.2 percent in October and November, a record monthly decline, with the biggest decline seen in the premium segment.
Vertu blamed rising inventory in the wholesale market, as well as sluggish retail demand, caused by persistently high car prices and interest rates putting pressure on affordability for customers.
Like-for-like used vehicle volumes shrank by 2 percent, although this was an improvement on the 5.7 percent decline in the previous six months.
Britain's fourth-largest car retailer also said it was affected by margins on new vehicles continuing their downward trend as supply volumes “began to exceed natural demand levels”.
Robert Forrester, CEO of Vertu, said: 'The current consumer environment remains volatile and recent trends of sluggish retail demand for new cars and weak used car pricing are likely to persist for several months to come.'
But he added that the group has “a strong balance sheet and a long track record of operational excellence and financial discipline.”
“These attributes mean we remain highly confident in our ability to capitalize on these challenging market conditions and the resulting increased opportunities in the sector,” Forrester said.
Like other car dealers, Vertu's business picked up as Britons started buying more used cars again after Covid-related restrictions were gradually eased two years ago.
Used vehicle prices rose significantly as semiconductor shortages forced automakers to scale back production and limited the number of new vehicles entering the market.
While still above pre-pandemic levels, used vehicle prices have fallen by around 18 percent since April due to declining demand, according to figures from trade price experts Cap HPI.
Vertu said used vehicle values ”will likely continue to weaken above historical norms in the near term.”
The group said cutting interest rates over the medium term would help improve affordability and provide “further stimulus” to a market witnessing increased supply.
Russ Mould, investment director at AJ Bell, said the “delayed impact of higher interest rates means appetite for big purchases is likely to be under pressure for some time to come and Vertu's road to recovery could be bumpy.”