Vertu Motors faces a tougher road ahead as electric vehicle targets continue to distort the UK car market, according to analysts at Stifel.
The broker said the Zero Emission Vehicle mandate is still weighing on profitability after manufacturers subsidised battery electric vehicle sales by more than £5 billion in 2025, or roughly £11,000 per car. This saw EVs at to 23.4% of total sales, which is still short of the government scheme's 28% target.
New car volumes rose 3.5% last year, but heavy discounting hit margins and is expected to continue in 2026 as targets rise to 33% for cars.
Stifel expects ongoing pressure on both manufacturers and dealers, with weaker nearly-new EV prices also squeezing margins. However, it sees Vertu as well placed given its scale, cost control and higher-margin aftersales division, where gross margins exceed 40%.
The broker left its 2026 financial year forecasts unchanged, including a £5.5 million hit from Jaguar Land Rover disruption, but trimmed earnings estimates for the following two years. It reiterated a buy rating, with a slightly reduced 78p price target.