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Vertu buoyed by scrappage schemes

The motor retailer appears to be up despite events
September 4, 2017

A July update from car retailer Vertu Motors (VTU) – which hinted at pressure in new car sales and used car margins – helped prompt our recent bear call on the company’s shares (Sell, 42p, 10 Aug 2017).

IC TIP: Sell at 44p

So perhaps it’s no surprise that a pre-close update ahead of the group’s half-year results in early October was fairly thin on detail. Aside from news of a £14m profit on disposal following the sale of its freehold Jaguar Land Rover dealership property in Leeds, progress across the wider business was kept vague. Suffice to say, bosses confirmed the group had continued to trade “in line with the trends set out in that [July] update and in line with market expectations”.

So why do the shares appear to be up despite events? The trading statement coincided with news from car manufacturers Volkswagen and Toyota that both intend to initiate scrappage schemes – the former for diesel models and the latter for both diesel and petrol vehicles. They join BMW, Ford, Hyundai, Mercedes-Benz and Vauxhall who have all launched similar schemes and have also been followed by Renault-Nissan and Kia.