Lookers upbeat despite slower new car sales

CAR dealership Lookers is set to beat full-year management expectations and hit the top end of market targets.

Despite a fall in new car sales the Manchester firm said a strong performance in the first nine months of the year was capped by fourth quarter revenues that were ahead of the same period in 2009.

“Consequently, we expect group results for the full year to exceed management expectations,” said a trading update from the company, which is listed on the FTSE SmallCap index.

The group said its Sheffield-based parts division, which works with 2,500 suppliers through 20 UK sites, had also delivered further improvements in profitability and continued to trade ahead of last year.

Lookers, which has around 120 franchised car dealerships, benefited from a growth in volume sales of new cars, up 3.8% on the previous year. This helped counter a 5.6% fall in its new car retail sales. Used car sales grew in the second half to help full-year volumes recover to 2009 levels, said the company.

During the year the group closed or sold seven underperforming dealerships. It plans to invest the cash in new businesses, “that offer the opportunity of a greater return on capital”.

“As we start the new financial year, the new and used car retail markets are likely to continue to be affected, as consumer confidence is subject to prevailing conditions in the UK economy,” said the group.

“However, the aftersales bias to the motor division and the group’s strong performance during the past two years, demonstrate the strength of the business and leave us well positioned for future growth.”