Shares of Vertu Motors plc (VTU.L) were losing around 20 percent in the morning trading in London after the automotive retailer on Thursday said that it expects profitability for fiscal 2024 to be lower than current market expectations.
In its trading update for three months ended November 30, the company said like for like used vehicle volumes fell 2 percent. The decline was 5.7 percent in the first half of the year.
Vertu Motors experienced reduction of wholesale markets in used vehicles due to higher supply and retail demand being affected by the combination of higher interest rates and high vehicle prices impacting affordability.
According to CAP-HPI Used car market report, used car values have fallen on average 4.2 percent in both October and November, representing record levels of monthly decline.
The automotive retailer projects that the used vehicle values would continue to weaken above historic norms in the near term.
As per the company, new vehicle supply has started to exceed natural demand levels. This leads to an increased pipeline of new vehicle inventory, which when combined with higher interest rates, has increased manufacturer stocking interest charges significantly above expected levels.
Robert Forrester, Chief Executive Officer of Vertu, said, "The current consumer environment remains volatile and recent trends of sluggish new car retail demand and weakness in used car pricing are likely to persist for some months."
Currently, Vertu Motors shares are trading at 67.67 pence, down 20.20% in London.
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