The boss of dealer group Vertu Motors has said the motor trade is unlikely to ever see the huge profits of 2021 again, declaring it a ‘moment in time’.
The listed motor retailer posted record profits last week totalling £80.7m for the past financial year.
Vertu raked in £3.61bn of revenue last year – up significantly on the £2.54bn revenue and £24.6m profits recorded the year before.
Vertu Motors, which includes the Vertu, Bristol Street Motors and Macklin Motors brands, is the most recent listed dealer group to post a strong set of financials.
Rivals including Lookers also enjoyed stellar results last year, with a massive 558 per cent rise in underlying pre-tax profit to £90.1m.
Meanwhile Pendragon finished last year by posting a record £83m profit before tax on revenues of £3.44bn.
When asked – in the video posted at the top of this story – if 2021 would be the best year for motor retailers or the start of a new era of profit-making, Vertu CEO Robert Forrester said it was a ‘unique’ moment.
‘The industry will make real profits [in the future], but I don’t think we’ll see the likes of 2021.
‘We might never see that again, actually. It was a unique set of market circumstances.
‘It took a global pandemic to get us there – and I don’t think we need another one of those!
‘It was a moment in time. I don’t necessarily see that happening too often. We should not be planning for it.’
No furlough payback
Last year, Vertu Motors received £6.6m in government support consisting of the Coronavirus Job Retention Scheme and business rates relief.
In the past, Forrester has been adamant Vertu Motors would not pay back the money despite other listed dealer groups such as Marshall doing so.
When asked if he and the Vertu board of directors had changed their mind after posting record profits last year, Forrester was vehement with his answer.
‘My viewpoint is absolutely critically clear – the government put in emergency support for industries to maintain employment and liquidity of industries.’
Referring to Vertu’s results, he added: ‘If you look at this period, the £6.6m was £200,000 in furlough in March 2021, and £6m in rates support.
‘Everybody has had that, and I know of zero, or not that many, retailers who have paid back rates support in terms of the whole pandemic.
‘We’ve made £80.7m of profit before tax and we will pay £16.6m in corporation tax, never mind national insurance, VAT and business rates.
‘The point about government support is really quite simple – if we had been rubbish at what we’re doing and made a loss, you wouldn’t be asking me if I’m going to pay back the furlough money.
‘The fact that we’re competent and actually know what we’re doing and made a profit, it’s bonkers to then say because you’ve been successful you’ve got to pay it all back.
‘I just don’t agree with it.’
He robustly added: ‘I think it’s cheap shots to be honest – virtue-signalling cheap shots.’
With Vertu’s results appearing in the same week as Constellation Automotive Group getting the green light from the Financial Conduct Authority to proceed with its £325m buy-out of rival Marshall, could Vertu be next in line for a takeover?
When asked if he’d had conversations about a potential acquisition, Forrester said: ‘I haven’t actually, to be honest,’ adding, ‘I’m quite happy with where we are.’
Cazoo and the online disruptors
Our interview also covered Cazoo and its admission that the company might never achieve profitability.
Asked if he, as a tenacious businessman, was horrified by this statement, the Vertu chief said: ‘There’s not much that horrifies me.
‘I actually think the franchised motor retail sector has benefited from Cazoo in a major way.
‘There’s lots of advertising about buying cars which gets people thinking about it – that’s not a bad thing.
‘The other thing is it has sharpened us all up. We’ve got a new set of competitors, so you have to rethink things.
‘It hasn’t changed strategies, but it makes you think, take on more software developers and push our product development faster.
‘Most people have now moved their digital activity on in leaps and bounds. Would they have done that if it wasn’t for these digital disruptors? Probably not. The pandemic might have brought it on a bit, but I think it gave everybody a bit of a jolt.
‘It’s good to have strong competitors because it forces you to be better.
‘We don’t have to be worried about these things. The markets will sort out the value.’