Consumer crunch dents new-car sales for Lookers

CAR dealership Lookers has seen private sales of new cars go into reverse as consumer confidence continues to take a battering.

The firm, which owns the venerable Taggarts brand in Scotland, yesterday reported a 10 per cent drop in private new-car sales during the past quarter.

Overall, new-car sales were up 2 per cent, boosted by a 30 per cent surge in fleet sales.

Elsewhere, the group, which sells marques including Land Rover, Ford, Vauxhall, Nissan and Toyota, said used-car sales were slightly higher than last year, while aftersales revenues were flat.

There was no separate figures for Taggarts, which the Manchester-based firm bought for £5.6 million in February 2003, providing its push into the Scottish market.

Founded in 1896 when James Taggart founded a cycle shop in Motherwell, Taggarts has sites in Glasgow and Motherwell, selling a range of marques including Jaguar and Volvo.

Lookers chief executive Peter Jones told investors: “The new and used car markets continue to be affected by uncertain economic conditions and the impact this has on consumer confidence.”

The company said trade had been “satisfactory” despite the background of difficult conditions.

Lookers’ 2 per cent increase in total new car sales comes against a 5 per cent decline in the whole market. The retail new car market reduced by 15 per cent, against Lookers’ 10 per cent decline, and the fleet market increased by 4 per cent, compared with the group’s 30 per cent surge. Used-car margins had been hit by weaker consumer demand and were slightly lower than last year, the chain added.

Meanwhile, Lookers remains in discussions with its banks to extend its fianance facilities, which expire in April 2012.

The firm said it continues to expect results for the financial year to the end of December to be in line with previous management expectations.

James Dilks-Hopper, an analyst at Numis Securities, nudged down his full-year profit forecast by £500,000 to £34.3m, which would be a slight rise on last year’s haul of £33.6m. He said the third-quarter performance was good but the consumer was under “increasing pressure”.

Peel Hunt, which has a “buy” recommendation on the shares, trimmed its pre- tax profit forecast by £1m to £34.5m “to reflect tighter used-car margins”.

But in a note, analyst John Stevenson said: “Lookers continues to manage cash flow and debt levels well, with a strong focus on working capital.”

He noted that Lookers had reported sales growth for the key month of September, when the registration plate changes, before taking account of the new Range Rover Evoque – a well-received model that is still struggling to meet demand.