News Column

Motoring New car buyers drive Lookers profits up 38%

August 14, 2014

Josephine Moulds

Britons' appetite for new cars has continued unabated, helping drive a sharp rise in first-half sales and profits at one of the country's biggest car dealers.

Lookers, which sells nearly 120,000 new and used vehicles a year, said pre-tax profits surged 38% to pounds 38m in the six months to June, with sales up 29% to pounds 1.6bn. It now expects to beat market forecasts with pre-tax profits of pounds 60m for the full year, thanks to record car sales.

Andy Bruce, the chief executive of Lookers, said: "New car sales and the market in general are rising, having dropped below the normal level of sales during the recession. We've seen that pent-up demand." Up to four-in-five new cars are bought on credit, meaning Lookers has also benefited from record low interest rates.

New car sales have risen each month for two years, defying the slowdown in other European markets. Analysts say Britons have been seduced by cheap finance and heavy discounting, but the market looks set to cool next year.

The Society of Motor Manufacturers and Traders said new car sales rose by 6.6% in July, prompting it to raise forecasts for the full year. It now expects new car registrations to rise by 8% this year to hit 2.45 million. But analysts at IHS Automotive have warned that growth might sink to between 1% and 2% next year. Colin Couchman said: "Our expectation is that things will start to cool off a bit."

He forecast that the pent-up demand left over from the recession should tail off over the next 12 months. He also expects carmakers to scale back their efforts to drive UK sales if the European economy picks up. Josephine Moulds

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Source: Guardian (UK)

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