Vertu Motors has cautioned that a prolonged conflict in Iran could lead to higher vehicle prices, as the car dealership group also stockpiled motor oil due to supply chain disruptions. The London-listed firm reported that profits were affected by government electric vehicle (EV) targets and a cyberattack on Jaguar Land Rover last year.
Iran War Impact on Vehicle Market
While Vertu has not yet experienced a direct impact from the Middle East conflict, it noted strong trading in March and April. However, CEO Robert Forrester told the Press Association that the war and subsequent fuel price surge have reduced demand for diesel cars while boosting interest in electric vehicles. Diesel prices have climbed over 31% to an average of 187.48 pence per litre since the conflict began in late February.
Forrester added that the supply of motor oil used in servicing operations, typically sourced from Qatar, has been affected. "We have built up a strong central stock of motor oil, but we did have some orders knocked back because there is a large dislocation in supply in the region," he said.
Shifts in Consumer Demand
The company highlighted robust demand for older vehicles, particularly those seven years or older, as consumers face financial pressures. Vertu also pointed to the government's Zero Emission Vehicles (ZEV) mandate, which requires 80% of new cars and 70% of new vans sold in Britain to be zero emission by 2030, and 100% by 2035. This policy has led to an oversupply of EVs, dragging down prices and hurting profitability.
Financial Performance
Vertu reported an adjusted pre-tax profit of £24.5 million for the year, down from £29.3 million the previous year, despite revenues rising to £4.83 billion from £4.76 billion. The company's shares dipped on Wednesday as the market reacted to the earnings report.
