Clock ticking for drivers to switch to electric vehicles but demand weak - leading dealership chief explains why

Vertu Motors, which has more than 190 showrooms including around a dozen in Scotland operating under the Macklin Motors banner, said demand for new cars in general among private buyers remained depressed, with sales volumes down 5.8 per cent in the five months to the end of July. That still trumped an industry-wide 12.1 per cent slump over the same period, according to figures from the Society of Motor Manufacturers & Traders (SMMT).

The firm said the UK new car market was increasingly driven by fleet and motability business, which made up almost 60 per cent of all new vehicle registrations in the period. It noted that car makers were turning to these lower margin channels due to declining private retail sales in order to shift rising stock levels. Vertu’s fleet sales were up 9.4 per cent over the five months, while motability sales rose 26.5 per cent.

Used car sales were resilient, up 5 per cent by volume in the five months, helping overall group revenues lift 3.3 per cent on a like-for-like basis. The group said that while first-half profits were expected to be lower, its performance was set to improve year on year in the final six months thanks to a stronger used car market.

Chief executive Robert Forrester said he was “pleased” with the company’s performance against a “fast-shifting market backdrop”.

He added: “The retail new car market remains weaker as the government’s regulation to transition to battery electric vehicles causes market volatility and negative impacts. The current dislocation in the market presents opportunities for Vertu Motors to capitalise on, assessed using strict investment return metrics, with our strong balance sheet providing financial flexibility, an excellent portfolio of strong brands, robust and scalable systems, and a strong and experienced leadership team with motivated colleagues.”

More than a fifth (22 per cent) of new cars sold by manufacturers in the UK next year must be zero emission, rising to 80 per cent in 2030, under rules brought in by the former Conservative government. This is leading to a strong supply of electric vehicles as manufacturers aim to meet government targets, but this comes amid weaker demand from more cost-conscious buyers. Car makers are resorting to discounting as supply is outstripping demand.

Vertu said its “high margin and predictable” aftersales business was a vital contributor to overall group profitability. It was providing an update to investors ahead of its interim results for the six-month period ended August 31.

Last week, John Clark Motor Group, which has a string of car dealerships across Scotland, said it was on the road to achieving its strategic objectives after passing the £1 billion turnover threshold. Bosses said the firm has seen the benefits of a continued focus on “operational efficiencies and agility” as it responded to an “ever-changing market”.

Meanwhile, a new report suggests that fewer than one in six motorists (16 per cent) believe that electric vehicle prices will have fallen enough to make them affordable by the new government’s planned 2030 pure petrol and diesel cut-off date.

The latest Startline used car tracker also shows that 22 per cent of motorists say there will not be sufficient public charging, 21 per cent that people need more time to make the switch to EVs, while a similar percentage of people say that they simply prefer petrol and diesel cars. In contrast, just 21 per cent say that the move should go ahead because it is the right thing for the environment.

However, despite this apparent lack of enthusiasm for electrification, the tracker also reveals that 71 per cent of people expect to be driving an EV by 2030 with just 13 per cent saying they would never own an electric car.

Paul Burgess, chief executive at Startline Motor Finance, said: “At first glance, these findings might appear almost contradictory, showing that most people both believe that EVs will still be too expensive in 2030 but that they also expect to be driving one.

“Probably the most sensible interpretation is that they think electrification is inevitable but that the car they will end up owning as a result will cost them more than the petrol or diesel they are driving today. Whether this is true at that point in time is open to question. There are already a large number of relatively affordable EVs on the used market and prices will inevitably fall further, while battery reliability over time is proving to be good.”

Electric car ownership for the masses is within reach as prices fall and finance opens - Dr Richard Dixon