Car sales firm enjoys strong start to year in face of tough trading conditions

Manchester based car sales group Lookers says it has enjoyed a strong start to the year despite tough market conditions.

Lookers issued a trading statement to the Stock Market covering the first quarter of the year.

The firm said trading was positive with a strong result during the vital month of March.

March is when new registration numbers are issued which traditionally results in a spike in car sales.

This year car sales fell nationally by more than 15% on the back of subdued spending and the ongoing uncertainty surrounding Brexit.

Lookers said it continued to perform strongly.

New car market represents a third of gross profit for the group. Whilst new car registrations fell by 12.4% to 718,489 cars in the first quarter, industry forecasts by The Society of Motor Manufacturers and Traders (SMMT) for the full year are now at 2.4m.

The number of new car sales fell by 5.6% compared to last year, but Lookers said the total still represent a high level of registrations compared to historical levels.

Turnover of new cars fell by 4%, significantly better than the total market reduction of 12%.

Total gross profit from new cars reduced by 8% with a small fall in profit per unit.

The same period last year was particularly strong due to the changes in Vehicle Excise Duty on 1 April, which saw a significantly increase in sales in the first quarter.

The used car market continues to be buoyant and values of used cars have remained stable. Used cars now make up 26% of total gross profits at Lookers.

Turnover of used cars increased by 8%. Gross profit from used cars improved with a small increase in profit per unit, resulting in an increase of 6% compared to the prior year.

Lookers sold two properties under sale and leaseback contracts with which raised £30m.

A statement read: “The group has produced a positive financial performance for the first quarter of the year, against very strong prior year comparatives for the new car market and in an ongoing environment of subdued consumer confidence.

“There continues to be strong momentum in both our used car and aftersales businesses, demonstrating the resilience and diversity of the group’s business model.

“We have a strong balance sheet which continues to be supported by operational cash flow and our level of net debt to EBITDA has improved.

“We also have substantial headroom in our bank facilities which gives us flexibility and capacity to develop the business through further acquisitions at a time when there are significant consolidation opportunities within the sector.”