Vertu Motors: Electric car manufacturers reduce prices to meet emissions targets
Vertu Motors has highlighted the strain on the new car market as carmakers rush to comply with government zero-emission objectives by lowering prices. The car dealership group noted that demand for battery electric vehicles (BEVs) is lagging behind supply, resulting in widespread price reductions.
During the six months ending in August, the company generated revenues of £2.5 billion, a 3% increase compared to the previous year. While used cars and aftersales services contributed to this growth, new car sales volume dipped by approximately 6%. Despite this decrease, Vertu Motors fared better than the broader UK new car market, which saw an 11.2% decline in new car sales during the same period.
The market is experiencing volatility, partly due to the UK’s environmental targets, according to Vertu. Manufacturers are under pressure to ramp up BEV supply to meet the government’s zero-emission vehicle mandate. This mandate stipulates that 22% of all new car sales should be BEVs by 2024, with targets increasing to 80% by 2030 and 100% by 2035.
Vertu Motors warned that unless current regulations are adjusted, the UK new car market may face ongoing challenges. The company stated, “As manufacturers cannot sustain price cuts indefinitely, Government incentives like tax breaks or subsidies will likely be needed to boost BEV private sales or changes to the mandate will be required to relieve pressure off the sector and facilitate a more manageable and sustainable transition to BEV vehicles.”
Despite weak demand for electric vehicles due to high prices and limited charging infrastructure, Vertu reported a decrease in adjusted pre-tax profit to £23.5 million in the first half of the year, down from £31.5 million the previous year. This decline was attributed to inflation and increased operational costs.
However, Vertu anticipates improved profitability in the second half of the year, driven by a more robust used car market. Chief Executive Robert Forrester expressed satisfaction with the company’s performance amidst a rapidly evolving market environment, where the government’s push for BEVs has led to market fluctuations and affordability challenges in the retail new car segment.