First quarter trading profits at Vertu Motors, owner of the Macklin chain of car dealerships in Scotland, were ahead on the same period last year as prices for new and used vehicles remained robust during the three months to the end of May.

The group, formed in 2006 as a consolidator in UK motor retailing, was also boosted by the £117 million acquisition of Helston Garages at the end of last year. The deal saw Vertu take over 28 Helston sites located in the south-west of England.

Now with 189 sales and aftersales locations throughout the UK, Vertu said it remains on course to meet its targets for the full year despite the impact of rising prices on consumer confidence.

"The board remains optimistic for the future," the group said. "New vehicle supply continues to improve whilst constraints in used vehicle supply in the UK are likely to persist, helping to underpin used vehicle values and gross profit.

READ MORE: Used car prices look set to remain at elevated levels

"The market outlook, however, remains unclear due to uncertainty of consumer demand in the light of the impact of inflationary pressures and higher interest rates." 

New car sales volumes increased by 10.8% in the first quarter, outpacing growth of 8% in the broader market. Profit margins on new vehicles remained strong at 7.9%, down slightly from 8% a year earlier.

Motability sales were particularly strong. Meanwhile, fleet and commercial vehicle volumes were up by 1%, with gross profit margins improved to 5.0% against 4.3% previously.

On the other hand, used car volumes fell by 5.9% on a like-for-like basis amid "on-going supply constraints".

READ MORE: Vertu says new car shortages and high prices to continue 'well into' next year

So far this year, Vertu’s gross profit per used unit sold has been £1,648 – a tiny drop on last year’s figure of £1,652. Gross margin also fell slightly to 7.8%, compared to 8.1% a year earlier.

The group’s average selling price per used vehicle grew by 3.4% on a like-for-like basis to more than £21,000, with the difference between this lower gross profit margins accounted for by higher energy costs and pay increases for staff.

Overall, chief executive Robert Forrester said he was pleased to report that trading remains positive.

"The entire, recently enlarged, Vertu team has put in hard work and dedication once again, and I would like to thank them all," he said.

"Used car pricing has remained firm and we have gained market share in the new car market. The performance of our high margin aftersales business has remained strong."

READ MORE: Lookers deal sends automotive sector speculation racing

Analysts said Vertu looks a likely takeover target following last week's news that Lookers, owner of the former Taggarts chain of car dealerships in Scotland, has agreed to a £465m takeover offer from Canada's Alpha Auto Group.

"We believe recent public market takeover activity highlights the value in the UK franchised motor retail sector and we reiterate our average valuation estimate of 108p per share, offering 55 per cent upside to investors," Zeus Capital said in a note to investors.

Lookers is the third-largest motor retail chain in the UK, with approximately 140 franchised dealerships representing some 30 manufacturers. It Scottish outlets include sites in Edinburgh, Motherwell, Glasgow, Stirling and Ayr.

Directors at Lookers are unanimously backing the cash offer of 120p per share, which is about 35% higher than the company's share price immediately prior to the deal being announced. TDR Capital, Artemis Investment Management, J O Hambro Capital Management and Schroder, who collectively hold 42% of Lookers' shares, have also promised to vote in favour of the deal.

Shares in Vertu closed yesterday's trading 1.3p higher at 70.8p, an increase of nearly 2%.