Vertu's first half: where a car dealer actually makes its money

Dealer group results are usually a hard read. Vertu Motors' interim numbers are worth the effort, because they answer a question most car buyers only guess at: where the money is actually made once a car leaves the forecourt. The group, which runs 196 sales and aftersales outlets across the UK, turned over £2,596.5m in the six months to 31 August 2026, up 3.4%. Adjusted profit before tax came in at £23.8m, up 19.0%, and the board expects the full year to beat current expectations. That is the third upgrade to guidance since the financial year began.

The numbers under the headline

Revenue rose from £2,510.0m to £2,596.5m, and like-for-like revenue grew 4.3%, which strips out the effect of sites bought and sold. Gross profit reached £290.6m, up 2.9%, and the gross margin held at 11.2%, exactly where it sat a year earlier. Reported profit before tax rose 24.1% to £24.2m. The balance sheet did more work than the income statement: net debt fell to £54.2m from £78.3m, and free cash flow was £17.5m against £0.4m, a cash conversion rate the company puts at 94%.

September, the plate change month, traded ahead of both last year and the board's own expectations. That comparison flatters it a little, since the prior September was disrupted by the JLR cyber incident and the group adjusts for that. Motability volumes rose 26.7% on a like-for-like basis against a market up 28.7%, and manufacturer bonuses were earned at good levels.

Where the gross profit sits

This is the part worth remembering the next time you sit in a dealership. Of the £290.6m of gross profit, aftersales produced £129.2m, which the company describes as more than 44% of the group total. Aftersales is the workshop and parts business, and it generated £223.6m of revenue. The group calls it a vital contributor to profitability, which understates the case: on these numbers it is close to half the profit.

The other lines look nothing like it. New car retail and Motability sales brought in £755.2m of revenue and £60.0m of gross profit. Used vehicles brought in £1,001.0m of revenue and £72.8m of gross profit. The used car business is the largest revenue line and the new car business the thinnest, and the workshop converts its revenue into gross profit far more efficiently than either. The mechanism is the 160,000 live service plans the group runs, where customers pay monthly for annual servicing and keep coming back to the same workshop.

Older cars, faster turns

Used volume growth came mostly from the cheap end. Cars aged seven years and over grew 34.7% in the period and accounted for almost 90% of the reported used vehicle volume growth, through an initiative launched in April called Value Cars by Vertu. Those cars sold on average 11.5 days faster than standard used stock, at a gross margin of 15.1% against 7.5% for the rest of the used range. The trade-off is a lower average selling price, down £336 across the core estate.

For anyone with a nine-year-old hatchback to sell, that is encouraging news. A dealer that once sent older part-exchanges straight to auction now has a reason to retail them, which means more competition for the cars private sellers assume nobody wants. It also explains a pattern in the used market we have written about all month: the pressure is not evenly spread, and the age of the car decides which way it goes.

The franchise mix is being rebuilt

Vertu is one of the clearest places to watch the Chinese brands arrive. It ran 18 Chinese-brand sales outlets at 31 August, against nine a year earlier, and has opened two more since, taking the total to 20, or 10.3% of its sales outlets. The group says it will open 11 more in the next nine months, which would take it to 31, or 15.1% of the estate. The names on that list include BYD, MG, Geely, Chery, Leapmotor, Omoda and Jaecoo.

The September trading update explains the appetite. Chinese brands excluding Volvo accounted for 24.5% of September retail registrations and all of the overall market growth, in a month when the new retail market grew 13.9%. Vertu's own like-for-like new retail volumes were level with last year, so the growth it is chasing sits with brands it does not yet fully represent. Our September market coverage set out how quickly that share arrived.

Electric growth, and diesel's retreat

Battery electric new retail volumes grew 125.6% against market growth of 75.9%. That is a strong number off a small base, and the group is honest that hybrids remain the technology most customers actually choose. It also repeats the industry complaint that the zero emission vehicle mandate distorts pricing and channel mix, and says the pressure is likely to continue to 2030 even if the mandate is revised in the current consultation.

Used diesel went the other way. Rising fuel costs cut demand, diesel was the weakest performing fuel type across the period, and used diesel cars nationally took eight days longer to sell than electric ones, on Autotrader data the group cites. That matches what the retail market showed in September, when used electric cars were the only fuel type with annual price growth. We covered that in our piece on used EV demand, and nothing in these results contradicts it.

What it tells you

One group's half year is one group's half year, and Vertu is careful about the rest of it, warning that consumer confidence depends on where inflation and interest rates go. The consensus it expects to beat is £26.5m of adjusted profit before tax for the full year, which says something about how thin the returns are on £4.8bn of annual turnover.

Robert Forrester, the chief executive, said the group delivered "record revenues" with adjusted profit before tax up 19.0% to £23.8m and gross profit growth "in every channel". The numbers add the part he did not need to say. Profit in this business comes from servicing the cars you have already sold, from retailing the older cars other people have finished with, and from being early to franchise brands that are still taking share. If you have ever wondered why your part-exchange offer looks the way it does, that is the machinery behind it.