Lookers and Bentley in the slow lane

MANCHESTER car dealership chain Lookers said today it was continuing to be hit by the tough market conditions and was looking closely at its cost base.

The Stretford-based group, which operates more than 130 car showroom sites across 31 brands, said its third quarter trading figures had seen a near 20% slump in new car sales – mirroring the national picture.

The company said trading last month continued to be difficult – the Society of Motor Manufacturers & Traders reported a downturn of 21% in the national
new car market, resulting in a fall of 19% in the third quarter.

Lookers chief executive Ken Surgenor said the outlook was grim for the remainder of the year: “Trading conditions are currently very difficult and the outlook for the remainder of the year remainsas tough as I have seen it.”

He said though that the company’s parts distribution and after sales businesses were performing well: “Parts distribution represents over 50% of our gross profits, and it remains strong. There are growth opportunities in this area.

“We took a decision several years ago to go into parts distribution because it is much steadier – whatever the economy is doing, people still need their cars repaired and serviced.”

Lookers said it was still generating cash and net debt at the end of September was in line with its expectations. The firm added that it had “adequate” banking facilities in place for the medium term.

Four under-performing sales sites have been closed in recent months, and Lookers said it was continuing to look at ways of improving the performance of its dealerships.

Mr Surgenor said he was “comfortable” with the recent share purchases by non-executive director Tony Bramall, who in recent months has uppped his stake to more than 20%.

Mr Bramall made £76m in 2004 when he sold his Yorkshire-based dealership CD Bramall to Pendragon. Lookers shares, which have halved in value in the last two months, slipped 9% this morning to 20p.

Meanwhile, it was reported that iconic car manufacturer Bentley wants to make between 200 and 300 voluntary redundancies from its 3,800 staff.

The Volkswagen-owned company is also cutting back its production for the second time in less than two months – this time dropping the night shift.

It will also send employees on an extended Christmas break, closing its two lines on December 10 and 11 and reopening on January 12. Workers will be paid through the shutdown, although the pay premium for the night shift will be discontinued.

Bentley had previously removed a shift a week from its production schedule.

The carmaker has been hit hard by the falling demand for luxury cars – its UK sales fell by 48% in September.