Top marques for car dealer as luxury models help it get back in the black

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

The firm posted underlying pre-tax profits of 10.1 million for the 12 months to 31 December, compared with losses of 33.6m in 2008. The positive outcome was also boosted by a strong recovery in used car margins.

However, yesterday's year-end results also showed revenues reversing 1 billion to 3.2bn.

The group now operates 276 franchises after it closed 26 outlets during the year, with the loss of almost 900 jobs. It has identified a further nine closures for 2010.

Chief executive Trevor Finn said the firm had "successfully dealt with the most challenging market conditions experienced since the nineties", adding: "We acted swiftly to implement significant cost saving and debt reduction actions."

Pendragon said it concurred with industry estimates of 1.8 million new vehicle registrations in 2010 – down from a pre-recession peak of 2.4 million. Last year, new car sales in the UK were just below 2 million, with nearly 300,000 of those coming from the government-backed scrappage scheme.

Pendragon, which acquired the Reg Vardy chain in 2006, said volumes of used car sales had been resilient during the downturn, although they did fall back.

The group has traditionally sold used cars up to only three or four years old but confirmed yesterday it had moved into the older vehicle market and sees this as "strengthening the used car sales part of our business".

At the luxury end, the Stratstone division saw a marked turnaround in demand, helping it to an operating profit of 18.6m, after a 2.5m loss a year earlier.

The subsidiary, which sells and services brands including Aston Martin, BMW, Cadillac, Ferrari and Maserati, posted a 6.1 per cent fall in volumes over the year on a like-for-like basis.

New luxury car registrations fell 7.9 per cent across the year – but this represented a 27.4 per cent decline in the first half, followed by a 20.3 per cent rise in the second six months.

Operating profits at the Evans Halshaw business, which sells and services more mainstream marques including Kia, Nissan and Vauxhall, topped 14.2m, from 6.1m the previous year.

Pendragon has a sizeable presence in Scotland after the Reg Vardy deal – the showrooms have been rebranded Evans Halshaw.

Last month, rival Vertu Motors made its first foray north of the Border, using the 2.7m acquisition of Dunfermline Autocentre as a springboard for expansion into the Scottish market.

Indigenous motor dealerships Phoenix Car Company and Peter Vardy have also been hitting the acquisition trail in recent years.

Analysts from brokerage Citi said Pendragon had benefited from scrappage scheme demand.

"In the year ahead, a greater participation in high-margin used car sales and further growth in after-sales, underpinned by tight cost control, look set to drive a continued recovery in group earnings," they said in a note.

The government has sounded "last orders" for the car scrappage scheme as the offer of a 2,000 discount on new models enters its final phase. The 400m fund will run out by the end of next month, with ministers making it clear it will not be extended.

More than 355,000 orders for new cars and vans have been made since the scheme was launched in the Budget last April and motor firms have been allocated "shares" for 50,000 potential further sales to help ensure a smooth closure.