Lookers’ private new car sales slip a gear

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Car dealership Lookers has reported a 10 per cent drop in private new car sales as it counts the cost of plummeting consumer confidence.

The Manchester-based group, which operates 119 dealerships, said overall new car sales were up two per cent.

This figure was boosted by a 30 per cent surge in fleet sales between July 1 and October 27.

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

Lookers has two sites in Sheffield, a multi-franchise Ford, Alfa Romeo, Kia dealership and a Ford dealership.

It also operates a VW dealership in Northallerton.

The company said yesterday: “The new and used car markets continue to be affected by uncertain economic conditions and the impact this has on consumer confidence.

“However, the aftersales bias to the business and the strong performance over the last two years, demonstrates the ability of the group to perform well in a difficult market.”

Lookers said trade had been “satisfactory” despite the background of difficult trading conditions in the motor retail market.

Its two per cent increase in total new car sales was against a five per cent decline in the whole mar-ket.

The retail new car market reduced by 15 per cent, against Lookers’ 10 per cent decline, and the fleet market increased by four per cent, compared to Lookers’ 30 per cent rise.

Lookers said used car margins had been hit by weaker consumer demand and were slightly lower than last year.

The company said it expects results for the financial year to December 31 will be in line with management expectations.

In a statement, Lookers said: “Our market leading independent parts division continues to perform well and has, despite reduced turnover with two large customers, maintained its performance being both in line with budget and ahead of the prior year.

“Working capital continues to be well managed and cashflow is ahead of both budget and the prior year.

“The sale of surplus assets has realised £12.7m in the nine months to September 30 and we have repaid £21.8m of bank loans in this period.

“Net debt is therefore at a lower level than both budget and the position at September 30, 2010.

“We are in advanced discussions with the group’s syndicate of banks, to replace our current bank facilities, which expire in April 2012 and expect that this will be concluded this quarter.

“We anticipate that the new facilities will provide the group with greater flexibility and also result in a reduction in the interest rate margin that is paid on group borrowings.”

Commenting on the trading outlook, Lookers said: “The motor division has made reasonable progress in the period, which is a good performance in a difficult market.

“The parts division continues to produce good results and makes a significant contribution to group earnings which are not affected by fluctuations in the new and used car markets.

“The group balance sheet has been further strengthened by strong operational cashflow and we have substantial headroom in our bank facilities. This provides financial security for the group as well as providing funding for us to make strategic acquisitions in both the motor and parts divisions.”

Lookers shares were more than one per cent higher after the update.

James Dilks-Hopper, analyst at Numis Securities, nudged down his full-year forecast by £500,000 to £34.3m, which would be a slight rise on last year’s £33.6m.

Mr Dilks-Hopper said the third quarter performance was good but the consumer was coming under “increasing pressure”.

In 2008, one of the best known names in Yorkshire car sales, Tony Bramall, revealed that he had agreed to sell part of his motor retail business to Lookers.

Lookers bought Bramall and Jones VW for around £2m.

Mr Bramall became a Lookers director in 2006.

The management team at Lookers is headed by chief executive, Peter Jones, who joined the group in 2008.

He was appointed managing director of the motor division in January 2009 and was promoted to the role of group chief executive on October 1, 2009.

greg.wright@ypn.co.uk

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