Vertu Motors has delivered solid annual results despite a challenging market, while urging the Government to accelerate its review of electric vehicle sales targets. The Gateshead-based dealership, which operates 191 sales and aftersales outlets across the UK, published its full-year results for the year ended February 28, 2026, highlighting resilience amid sector pressures.
Financial performance
Revenues reached £4.83 billion, up 1.5% from £4.76 billion in the prior year. Adjusted pre-tax profit came in at £24.5 million, down 16.4% from £29.3 million but ahead of market expectations. Net debt reduced to £61.3 million from £66.6 million, while adjusted operating profit was £46.5 million, down 11.3% from £52.4 million.
The group's aftersales operations achieved a record performance, now generating over 46% of group gross profit. In March and April, core group gross profit rose by £2.9 million compared to the same period last year. Vertu also recognised £3.4 million in insurance proceeds as other income, offsetting £3.9 million in losses from the JLR cyber-attack.
Market challenges and ZEV mandate
Vertu highlighted that the Zero Emission Vehicle (ZEV) mandate is significantly impacting its profits by distorting volumes and margins. The mandate, introduced to force manufacturers to sell more electric vehicles annually or face fines, has led to suppressed retail margins and shifted volume into lower-return channels. Chairman Andy Goss stated: "New vehicle market conditions were heavily influenced by the Government’s ZEV mandate, which continued to distort manufacturer behaviour."
The group noted that consumer and business confidence remained subdued. While the planned consultation on the ZEV scheme is not due until 2027, Vertu has asked the Government to bring it forward to 2026. CEO Robert Forrester commented: "The UK retains one of the most ambitious BEV transition trajectories among major automotive markets, with manufacturers required to achieve a 28% BEV mix in 2025 and 33% in 2026, facing fines of £12,000 per vehicle for non-compliance."
Forrester added that BEVs accounted for only 23.4% of car registrations in 2025, achieved largely through financially unsustainable discounting. The Society of Motor Manufacturers and Traders (SMMT) estimates discounting of BEV vehicles exceeded £5 billion in 2025, at least £11,000 per BEV, distorting both new and used car markets. By the end of April 2026, BEV share stood at 23.1% calendar year to date, well short of the 33% target.
Strategic initiatives
In response to market conditions, Vertu launched Value Cars by Vertu last month, targeting the seven-to-14-year-old used car market, with initial indications of incremental profits. The group is also expanding its portfolio with new Chinese entrant brands, including Jaecoo, Omoda, Lepas, Chery, and Leapmotor, joining its five BYD dealerships.
CEO Robert Forrester said: "The group has delivered solid results against the backdrop of sector pressures from the Government’s ZEV mandate on new car profitability, as we have focused on controlling the controllables, such as aftersales and cost. The group is benefiting from stable management, a highly trained and committed workforce, strong cashflows funding a maintained dividend, another £12m share buyback and significant asset backing."
He added: "The group is therefore excellently positioned to take advantage of the inevitable opportunities that will arise as the sector continues to consolidate. I am delighted that the trading performance in March and April has been strong and ahead of the prior year period."
Outlook
Vertu is monitoring the impact of the Middle East conflict on fuel price volatility, consumer confidence, and vehicle demand, but no material adverse consumer trends are visible yet. The group expects higher interest in battery electric and hybrid vehicles but warns that a prolonged conflict could drive up inflation.
