Top car dealer duo see their profits stall

Two of Britain's leading motor dealers, Lookers and HR Owen, today said profits have been wiped out this year.

Lookers said underlying profits will be down 75% at £10 million for 2008. But that surplus from operations has been offset by a £12 million cost-cutting exercise. Lookers said that will lead to it scrapping its dividend payout for the full year.

"The new car market has experienced an increasingly challenging sales environment," Lookers said. "This has resulted in significant reductions in national sales volumes - 23% in October and 37% in November," it added.

"Since the half-year end, residual values of used cars have also fallen, and are only expected to stabilise in early 2009.

"While used-car volumes are behind last year, the company is now starting to see an increase in both volumes and margin."

HR Owen chief executive Nicholas Lancaster said the cut in VAT to 15% had not had "any noticeable impact" on sales. He warned: "Our expectation is that trading throughout 2009 will remain severely depressed."

The group would make a loss in the second six months of the year but break even for the whole year, he said..

The news from the pair came as the motor trade seeks help from Business and Enterprise Secretary Lord Mandelson.

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: "The UK motor industry is facing unprecedented challenges, and urgent action is now required."