Vertu Motors Unveils Major Cost-Cutting Initiative
North East motor retailer Vertu Motors Plc has announced a comprehensive £10 million cost efficiency programme, including job losses and outlet closures, as it navigates challenges in the automotive market. The Gateshead-based company, which operates 188 sales outlets across the UK, revealed the measures alongside an upbeat trading update showing revenue growth despite headwinds.
Trading Performance and Market Challenges
In the five months to the end of January 2026, Vertu Motors reported a 3.3% increase in revenues, with like-for-like growth of 2.2%. Service revenues saw a particularly strong rise of 4.8%, while used car performance remained solid with 2.8% volume growth, albeit at slightly reduced margins. The company attributed market challenges primarily to the UK Government's Zero Emission Vehicle (ZEV) mandate affecting the new car segment.
Chief Executive Robert Forrester commented: "We are pleased with the team's performance as we control the controllables against a challenging market backdrop in the new vehicle segment, in large part due to the Government's ZEV mandate."
Cost Reduction Measures
The £10 million cost efficiency programme includes:
- Further headcount reductions across the business
- Reduced marketing activity following the company's April 2025 rebrand
- Implementation of AI technology to drive operational savings
- Closure of four sales outlets during the period
These measures come on top of restructuring costs of up to £4.5 million, which will be recorded as non-underlying costs for the year ending 28 February 2026. The company noted that these costs are offset by gains from property and business disposals.
Strategic Business Moves
During the reporting period, Vertu Motors undertook several strategic initiatives:
- Acquisition of Leicester Skoda for £600,000
- Opening of Nottingham Skoda dealership
- Sale of the group's Honda dealership in Huddersfield, generating approximately £1 million
- Closure of Volvo and Peugeot businesses in Barnstaple
- Closure of Peugeot dealership in Launceston
- Cessation of Honda operations in Bradford
Government Policy Impact and Future Strategy
Vertu highlighted mixed signals from UK Government policies regarding electric vehicles, combining grant subsidies with proposed pay-as-you-drive charges from 2028. The company's aftersales business continues to show revenue and profit growth, supported by increased technician numbers.
A new strategic initiative launching in April will focus on older vehicle retailing in the seven to 14-year-old range, described as "opening a new segment, leveraging the Vertu brand, distribution and data expertise in used vehicle pricing."
Cyber Attack Recovery and Financial Measures
The company reported that its Jaguar Land Rover business has returned to normal operations following the September 2025 cyber-attack on JLR. The financial impact on Vertu is expected to be less than the previously estimated £5.5 million, with an insurance claim in progress and a £1 million interim payment already agreed.
Vertu has also launched a new £12 million share buyback programme, following the purchase of 18.8 million shares for £11.3 million under the existing programme launched in February 2025.
Outlook and Leadership Perspective
Despite complex market dynamics, Vertu expects adjusted pre-tax profit to "increase moderately" in the year ahead. Robert Forrester added: "Used vehicle sales were robust despite consumer uncertainty impacting retail demand. The work that has gone into cost control, property disposals and optimising stock levels has contributed to an excellent cash performance."
The CEO expressed confidence in the sector's opportunities, citing Vertu's strong balance sheet, manufacturer partnerships, scalable systems, and team capabilities as key strengths for navigating current market conditions.
