Lookers aims to beat market downturn

The firm described ​Brexit and the General Election as unhelpful and said it views the second half of the year with some caution. ​

Chief ​e​xecutive Andy Bruce​ said: “The General Election wasn’t decisive​. It has created quite a bit of political chaos and that has fed into the Brexit debate. There are splits in the Conservative party and the fuels the consumer psyche.”

​Despite worries about the future health of the economy, Lookers is bullish about its own prospects.

The firm reported an 18 per cent increase in adjusted pre-tax profits to £50.2m ​in the six months to June 30 ​and said it is well positioned to continue its strong performance.

Lookers expects the new car market to shrink by 3 per​ ​cent​ in total​ this year, ​with the main drag coming in the second half of the year​.

The firm had previously said it expected 2017 demand to match last year’s 2.69 million sales.​ ​Mr Bruce, who has been one of the most buoyant chief executives in previous months about the resilience of the market, also warned that demand in 2018 would depend on how the ​G​overnment handles Brexit.

“I sense that it might be about flat, but a lot will depend on how Brexit plays out and the macro picture and the media commentary around it,” he said.​​​

“We didn’t see all the political rumblings and the indecisive election coming and there’s no doubt that that’s had its effect on the fringes of the market in terms of confidence​.”​

Lookers, which will increase its interim dividend by 10 per​ ​cent​​, ​has benefited from dropping a number of lower-performing car brands and focusing on a smaller portfolio of ​popular ​vehicles.

“​We have the right brands and the right locations,” said Mr Bruce.

Four years ago the group had 32 car brands.

“We had a relatively indiscriminate strategy. We wanted to be more focused,” he said.

“We kept the premium brands - Audi, Mercedes Benz, Jaguar Land Rover and BMW - where the margin quality is very high.”

On the mainstream side it has Ford, Vauxhall, Volkswagen and the Renault-Nissan Alliance.

Lookers is keen to expand its Yorkshire operation and Mr ​Bruce said the firm is on the hunt for dealerships in Leeds, Sheffield, Wakefield, Harrogate, Bradford and York.

“​Yorkshire is a highly populated part of the country. We just need the right opportunities​. We are looking at big cities. We don’t want to be in small towns,” he said.

He said the group is underweight in Yorkshire​, where it currently has operations in Leeds, Sheffield, Harrogate and Northallerton​.

Lookers said it​ expects to meet full-year expectations​ despite the uncertain economic outlook​.

Revenues from aftersales, which represents the largest proportion of the group’s business, increased 4​ per cent​ on a like-for-like basis.

The company also pointed to a positive increase in new and used car revenue and gross profit.

New car registrations have fallen since April, the longest run of declines since 2011, and are down 2 per​ ​cent ​in the ​year to date, according to industry data.

Lookers' update​ follows similar comments from rival Marshall Motors ​on Tuesday, which said economic and political uncertainty ​i​s putting the brakes on the UK new car market.