diff --git a/src/group_cmd.cpp b/src/group_cmd.cpp
--- a/src/group_cmd.cpp
+++ b/src/group_cmd.cpp
@@ -466,10 +466,11 @@ CommandCost CmdAlterGroup(DoCommandFlag 
 			g->parent = (pg == nullptr) ? INVALID_GROUP : pg->index;
 			GroupStatistics::UpdateAutoreplace(g->owner);
 
-			if (g->livery.in_use == 0) {
+			if (!HasBit(g->livery.in_use, 0) || !HasBit(g->livery.in_use, 1)) {
+				/* Update livery with new parent's colours if either colour is default. */
 				const Livery *livery = GetParentLivery(g);
-				g->livery.colour1 = livery->colour1;
-				g->livery.colour2 = livery->colour2;
+				if (!HasBit(g->livery.in_use, 0)) g->livery.colour1 = livery->colour1;
+				if (!HasBit(g->livery.in_use, 1)) g->livery.colour2 = livery->colour2;
 
 				PropagateChildLivery(g, true);
 				MarkWholeScreenDirty();