Owner of Scottish motor chain Macklin warns of new car squeeze amid chip shortage
In a trading update, the firm said a tightening of new vehicle supply, largely reflecting part shortages flagged earlier in the year, had become “increasingly apparent”.
The car industry has been struggling with a global shortage of certain semiconductor components which are used extensively in modern motors.
“The expected time between order and delivery of new vehicles to customers for certain of the group’s franchises is now seeing elongation,” Vertu noted in its update to investors, which coincided with its annual shareholder meeting.
“The used car market remains very robust from a demand perspective,” the firm added. “The reduction in new car supply is contributing to a reduced supply of used vehicles, with a resultant exceptional wholesale pricing environment.”
Despite this setback, bosses have seen a continuation of the strong trading trends witnessed in March and April. If these trends continue, it added, a strong first-half financial performance is anticipated.
The group told investors: “In light of the strong trading performance to date, driven largely by the exceptional used car market environment, the board now anticipates that the group’s full-year adjusted profit before tax will be above current expectations and in the range of £28 million to £32m.
“The board remains confident in the prospects for the group. With its strong asset base, scale, manufacturer relationships, well invested systems including the Click2Drive sales technology platform and experienced leadership team, the board believes that the group is strategically very well placed to capitalise on the changes and opportunities in the UK motor retail sector.”
In May, the group said it had seen sales gather pace after reopening its doors to walk-in customers and putting Brexit uncertainty “behind us”.
Announcing market-beating full-year profits, despite lockdown impacting much of the period, the firm said pent-up demand in sales was again evident as customers sought to test drive vehicles for the first time in months.
The Macklin Motors showrooms in Scotland reopened on April 5, subject to requiring an appointment to be made, with the rest of the company’s showrooms opening a week later without the need for an appointment.
Despite the lockdown restrictions, Vertu saw strong trading conditions in March with trading profits at record levels for the group.
The results released for the year ended February 28 revealed an adjusted profit before tax of £24.6m, which was ahead of analysts’ forecasts and the £23m banked a year earlier.
Since the start of March, 18 sales outlets have been added to the group, including the addition of three new franchise partners – BMW, Mini and motorbike brand BMW Motorrad.
The firm, which has a network of 149 sales and aftersales outlets across the UK, also pointed to “substantial” growth in online retailing using its Click2Drive sales technology platform.
Chief executive Robert Forrester said at the time: “These results, which are ahead of expectations, are outstanding in the Covid interrupted circumstances.”