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(Sharecast News) - Vertu Motors posted a slide in full-year profits on Wednesday, after the government's zero emission vehicle mandate weighed on new car sales.
The UK car dealership, which has 191 sales and aftersales outlets, saw revenues rise 1.5% to 4.83bn in the year to 28 February. Adjusted pre-tax profits came in at 24.5m, marginally ahead of forecasts for 24.3m, but down on last year's 29.5m. Pre-tax profits fell to 20.3m from 24.8m.
Vertu said 2026 had been "highly challenging" for the UK automotive sector, with weak new vehicle markets, margin pressure and the cyber-attack on Jaguar Land Rover last autumn.
Chair Andy Goss said: "New vehicle market conditions were heavily influenced by the government's ZEV mandate, which continued to distort manufacturer behaviour, suppress retail margins and shift volume into lower-return channels.
"Consumer and business confidence also remain subdued generally."
The ZEV mandate was introduced in January 2024 to shift new car sales away from petrol and diesel models. The intention is that all new sales will be zero emission by 2035.
However, aftersales remained strong during the year, Vertu noted, and now generated over 46% of gross profits.
It also flagged a strong start to the current year, with the trading profit in March and April up on the prior year, although it acknowledged that war in the Middle East could increase fuel price volatility and "further pressure consumer confidence and household disposable income".
Robert Forrester, chief executive, called the full-year numbers "solid", adding: "The group is benefiting from stable management, a highly trained and committed workforce, strong cashflows funding...and significant asset backing.
"[It] is excellently positioned to take advantage of the inevitable opportunities that will arise as the sector continues to consolidate."
As at 1000 BST, the AIM-listed sock had shed 2% at 64.3p.
David Hughes, analyst at Shore Capital, said: "While the market continues to be plagued by externalities, we see Vertu as a very well run business, consistently delivering profit on the back of operational discipline and supported by a strong balance sheet."
Vertu is a house stock at Shore Cap.
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