Gateshead-based Vertu Motors plc said its cost base will rise by £10 million as a direct result of the UK government’s Autumn Budget, most notably from rises in national insurance contributions (NIC) and the National Minimum Wage.
To fully mitigate these cost increases Vertu said it will cut jobs and close most of its retail operations on Sundays.
Vertu said in a trading statement that actions have been delivered to fully offset this cost “which will incur an exceptional restructuring cost of up to £4.0m in FY25.”
The firm said: “The changes to the minimum wage and National Insurance contributions announced in the Autumn Budget will add c.£10m to the Group’s labour costs in FY26.
“We expect to see wage inflation passed through in other areas, notably valeting and cleaning costs.”
In the trading statement, Vertu also said adjusted profit before tax for the year ending February 28, 2025, will be significantly below current market expectations “primarily due to dislocation in the new car market.”
Vertu shares fell almost 8%.
In the new car market, Vertu said it delivered like-for-like retail volumes and Battery Electric Vehicle (BEV) sales ahead of the market trends in the five-month period to January 31, 2025.
The firm said: “UK volumes overall in the new retail channel were the lowest for 25 years including the pandemic period. Record proportion of fleet sales across the UK market has adversely impacted gross margin.”
On the Zero Emission Vehicle (ZEV) Mandate, Vertu said: “The ramp up in the ZEV Mandate target to 28% for 2025 is likely to lead to further ongoing discounting activity in the new car market, continuing the margin pressure seen during the current year. Volumes are also likely to be under pressure.”
In used cars, Vertu said: “Gross margin expansion was less than anticipated due to subdued consumer confidence and heavy discounting of new cars. Like-for-like gross profit generation from the sale of used vehicles, however, has exceeded prior year levels in the five-month period to 31 January 2025.”