See part 1 and part 2 of this series on car dealerships - this post leads on from the discussion in those two.
It might seem slightly odd to focus a post in a series of comparisons on one particular company, but Vertu Motors (LON:VTU) is enough of an outlier to make them both the most interesting company to investigate and the company which can inform us most about how the sector as a whole operates. Last time I went through the DuPont identity with a view to identifying the main differences between Vertu and the pack, but a discussion simply of the differences doesn't give a great deal of insight into why the differences exist. I had a few thoughts on the subject; acquisitive practices, company strategy, sales mix and so on - but also took the fast track and decided to ask management themselves. Where better to get the information than straight from the horse's mouth?
I'm not an expert on the sector - far from it - and nor am I an expert on the business. More cynical investors tend to point toward management being 'professional optimists' - but I do think there's value in hearing what they have to say on a topic if you're unsure about a particular point or idea in general. This doesn't preclude you being cautious and level-headed when considering what the're discussing; it's just more information you can choose what to do with. Since investing is a game of informational asymmetry anyway, I'll take anything that might help me understand what I'm thinking about. I should also say it's not always that easy to speak to management - so that Vertu make it so is a credit to them and their board.
With that preamble, I get on to the meat of the post - what separates Vertu from their competitors, and how is it relevant to us as potential investors?
Strategy
Perhaps the most obvious, and most core reason Vertu might deviate from the pack is strategy - something that management are doing that's fundamentally different from the other listed car dealerships which impacts returns. As was mentioned on Stockopedia and elsewhere, at the most basic level Vertu are simply more acquisitive than their peers. One would expect this would have the effect of reducing returns - it takes time…
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