Phoenix rallies with record profit of £2.5m after stunning U-turn

•• Phoenix has been selling Mitsubishi cars from its first Edinburgh franchise since January (picture: Getty Images)

Phoenix Car Company, one of Scotland's fastest growing motor dealerships, has bucked the industry gloom and reported a record full-year profit.

Despite a backdrop described by the company's directors as "an extraordinary year by any measure", the Paisley-headquartered group booked a pre-tax profit of just under 2.5 million, its biggest to date. The result compares with losses of more than 3.7m the previous year when the business made heavy writedowns.

The latest set of accounts, newly filed with Companies House, reveal largely flat turnover of about 136m, while the overall headcount dipped by 34 to 397.

Managing director John McGuire said he was "absolutely thrilled" with the return to the black, putting the performance down to "a lot of hard work".

Phoenix, which runs a string of franchises across central Scotland selling marques including Honda, BMW and Mitsubishi, said its performance was set against a backdrop of a 6.4 per cent national decline in car sales.

Britain's car dealerships have struggled amid a drop off in consumer confidence, stubbornly high fuel costs and faltering credit markets.

The car scrappage scheme - a joint initiative between the previous government and car manufacturers - provided a welcome shot in the arm. However, that ended in March and the prospect of austerity cuts and higher taxes could put a dampener on sales next year.

McGuire said the scrappage programme had helped trade during the period under review, but gave a cautious outlook for sales in 2010-11.

"The increase in VAT (in January] is not going to be good news but we just need to get on with it," he told The Scotsman.

"It's certainly going to be a challenge, but fingers crossed for another record-breaking year."

In January, the group launched its first franchise in Edinburgh, selling Mitsubishi and Hyundai models from a site on the city's Seafield Road.

The group plans to take a 10 per cent share of the Scottish car sales market within the next ten years.

McGuire said it was "good to now have an east coast presence", adding that business at the new showrooms was "going better than expected".

The accounts show the total wage, social security and pension bill rising to 8.7m from 8.5m, despite the staffing reduction, with workers benefiting from pay increases, McGuire noted.

In February, it emerged that Britain's biggest car dealership, Pendragon, had also driven into the black with the help of the "cash for bangers" scheme and resurgent sales of luxury brands such as Ferrari and Maserati.

But Pendragon, owner of the Evans Halshaw and Stratstone chains, warned that tough trading would prevail, forcing it to close more showrooms..