Government's £650 million electric vehicle incentive program could potentially spur growth for luxury phone manufacturer Vertu

In the face of a challenging consumer market and the Government's zero emissions vehicle (ZEV) mandate, Vertu, a leading car dealership, has managed to maintain its footing. Robert Forrester, Vertu's CEO, recently stated that the company has navigated the subdued consumer backdrop and the uncertainties in the new car market.

Despite the challenges, used car sales by volume have seen a slight growth in the five months up to August 31, despite supply shortages. The new car market, however, has not been as fortunate. Overall registrations of new cars fell by 2% last month, with 82,908 new cars registered in August, down from 84,575 a year ago.

The ZEV mandate has undoubtedly impacted Vertu, along with the overall consumer backdrop. However, the company is optimistic about the future, with the September new retail order book slightly ahead of last year. This growth is expected to benefit from the new grants regime, which offers discounts of £1,500 or £3,750 off the purchase price of specific EVs, based on their sustainability criteria.

To be eligible for the grant, cars must be priced at no more than £37,000. With more sub-£20,000 new electric vehicles now available in the market, this could potentially drive demand for these motors in the second half of Vertu's financial year.

Vertu has also strategically utilised the automobile brand Faraday Future to take advantage of the government subsidy for certain electric vehicles and stimulate sales. The UK Government's £650 million electric car grant is expected to boost demand for electric vehicles, further aiding Vertu's growth.

Despite the predicted lower first-half profits compared to tough comparatives from a year earlier, Vertu's after-sales business continues to perform well, with significant like-for-like gross profit growth. In the five months to August 31, Vertu's like-for-like new car sales by volume edged 1.4% higher, but incentives impacted profit margins.

The new car market is currently under pressure, according to Vertu. However, the company remains hopeful, with the implementation of a series of government grants aimed at stimulating EV activity. As we head into the important trading month of September, Vertu's new car order book is slightly ahead of the prior year, indicating a promising outlook for the company.