Buyers aren’t snapping up electric cars, Vertu warns, as supply outstrips demand
- Vertu revealed like-for-like used vehicles down by 6.3% in first half
- New car sales were up but dealer said electric car supply outstrips demand
Buyers are failing to snap up new and used electric cars, Vertu Motors has warned, as it said supply of battery-powered vehicles is outstripping demand and denting prices.
Vertu said it remains ‘positive’ despite a fall in the volume of used vehicles sales in the first half of 2023, as rising interest rates left it unable to offer zero per cent finance deals.
The car dealership group said used car prices were holding firm due to limited supply, ‘except for used electric vehicles which have been impacted by substantial increases in supply into the used market.’
But Gateshead-based Vertu also revealed that trading profit was above prior year levels, which it put down to the acquisition of Helston – a deal completed in December.
The car dealership business revealed that like-for-like used-vehicles volumes had fallen by 6.3 per cent in the first half of the year
Vertu revealed like-for-like used vehicles sales had fallen 6.3 per cent in the five months to 31 July, with the company putting this down to less finance options driving a ‘change in approach, along with a continued lack of supply of used vehicles’.
The Covid pandemic and recovery years were marked by a shortage of new cars as lockdowns and a computer chip shortage dented manufacturing, followed by the impact of the war in Ukraine.
A resurgence in car supply has seen many dealers find they have more new electric cars than private buyers want, leading to price reductions.
Vertu said: ‘Recent increased supply of new electric vehicles appears to be exceeding retail demand, creating an imbalance in pipeline inventory coming into the key plate change month of September.
‘Manufacturers are reacting to this through the offer of discounted prices and supported finance rates to stimulate retail demand.
‘Fleet sector demand for electric vehicles remains robust and is currently critical to the electrification of the vehicle parc.
Vertu Motors shares were down by 1.1 per cent to 68.2p in early trading.
Robert Forrester, chief executive officer of Vertu Motors, said: ‘Trading remains positive.
‘The entire Vertu team has put in hard work and dedication once again, and I would like to thank them all.
‘Used car pricing has remained firm and we have gained market share in the new car market.
‘The performance of our high margin aftersales business has remained strong. The integration of Helston Garages remains on track to deliver the planned synergies.
‘The Board remains optimistic for the future, we anticipate that full year results will be in line with current market expectations, and we are excited about the opportunities our enlarged portfolio will create for Vertu Motors.’
The business also mentioned that during the first half of the year it was able to increase ‘vehicle inventory levels to ensure future sales volumes are maximised’.
The car dealership said it has continued to buy back shares, repurchasing approximately 7.4million shares which represents 2 per cent of opening shares in issue, in the financial year to date, for a total cost of £4.8million.
> The ten fastest depreciating second-hand cars revealed – and they are all electric
In May, research from second-hand sales platform Motorway showed that the value of some used SUVs and city cars has jumped by almost 30 per cent over the last two years thanks to a combination of high demand and low stock.
It also found that cars that can be used for trade, such as vans and private hire vehicles, are in high demand with dealers and can get great prices when sold in fair condition with relatively low miles throughout their lifespan.
But despite average used car prices continuing to rocket, the value of some models has plummeted by more than a quarter in the last twelve months.
The biggest price fallers were electric cars, as a combination of factors has dragged down EV valuations, including rising stock of used vehicles, increased supply of showroom-fresh cars and salary sacrifice tax break incentives to buy new.
