Car dealership Vertu Motors has blamed Budget cost hikes for job cuts and said it has been forced to shut showrooms on Sundays as it braces for a hit of around £10 million.

The group said it had already reduced its workforce to make savings ahead of a soaring wage bill following the Chancellor’s move to hike national insurance contributions and the minimum wage.

It is understood the number of jobs being axed is minimal, but that the group will reduce roles by not replacing workers when they leave.

Vertu sees around 15% to 20% of its 7,500-strong workforce leave each year due to natural staff turnover.

The group, which has 198 sites across the UK, said it was also shutting most of its showrooms on Sunday for the first time as part of efforts to offset the cost impact.

And it will merge its three brands under the Vertu banner.

It warned it was facing around an extra £10 million in wage costs in its next financial year to the end of February 2026 from the Budget measures, while it expects to see wage inflation passed through in other areas, such as car valeting and cleaning costs.

The group becomes the latest firm to reveal job losses in the wake of the Budget tax hike.

A number of large firms including Sainsbury’s have axed jobs in the first weeks of 2025, with some of the cuts at the supermarket understood to be linked to the increase in NICs.

Vertu also warned that profits will be “significantly” lower than expected for the year to February 28 due to subdued consumer demand and “severe disruption” to the new car market from the Government’s specific zero emissions vehicle (ZEV) sales targets.

Most analysts were expecting annual underlying profits of £34.6 million, down from £37.8 million the previous year.

Vertu’s shares fell 6% after the profit alert.

Robert Forrester, chief executive of Vertu, said: “The Government’s ZEV Mandate is causing severe disruption to the UK new car market, and the consumer environment is subdued.

“The Government and the industry need to get together to address the root cause of the issues to allow the automotive sector in the UK to return to its traditional role of stimulating economic growth, which is a catalyst for employment.”

The company has warned repeatedly in recent months that the market was experiencing volatility as a result of the UK’s environment targets.

It said last year that manufacturers were being pushed to increase the supply of battery operated electric vehicles (BEVs) because of the Government’s zero-emission vehicle mandate, but have been forced to slash prices in the face of falling demand.

The new rules require 22% of all new car sales to be BEVs in 2024, with the target rising to 80% by 2030 and 100% in 2035.

In October, Vertu reported a decline in its adjusted pre-tax profit to £23.5 million for the half-year, from £31.5 million a year ago.