Lookers on the hunt for more car dealerships

'‹'‹Lookers, one of the UK's biggest car dealerships, reported strong half year results as it hunts for more dealerships in Yorkshire as part of its plans to double the size of its business in the county. '‹'‹

The firm, which ​reported record first half profits, said the June 23 referendum had created uncertainty in Britain but there had been little ​effect on demand​ and it has not seen ​any major impact on sales of new and used cars.​

​​Lookers’ chief executive Andy Bruce said: “​Since June 24 our sales are almost identical to where they were at the same period last year, to my surprise to be honest.

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“The notion that cars are a big ticket item no longer exists. The average payment is £6 per day.

​“Cars are cheaper than ever. 82 per cent of our customers take out a cheap finance package. It’s the default way now. People budget monthly for their car. It’s not the same need to own them.”

A small VW car now costs £119 a month through Lookers and as customers don’t pay off the full amount within the three-year contract, most people go onto another financing deal at the end of the three-year period.

Lookers said adjusted pre-tax profits rose 16 per cent to £50.1m, the first time its interim profits have gone above £50m.

​Mr ​Bruce said the firm is on the hunt for dealerships in Leeds, Sheffield, Wakefield, Harrogate, Bradford and York.

“Yorkshire is about 5 per cent of our business and our goal is to get to 10 per cent,” said Mr Bruce.

“We sell 10,000 new and used cars a year in Yorkshire and we’d like to double that figure. We are looking at big cities. We don’t want to be in small towns.”

He said that the group is underweight in Yorkshire, despite it having a significant population.

The group, which already has operations in Leeds, Sheffield, Harrogate and Northallerton, said new car registrations hit 2.63 million last year and could top three million in the coming years.

Mr Bruce said the market has been buoyed by an increasing population in the UK so more people need to buy cars. At the same time disposable incomes have gone up and unemployment is at a very low level.

L​ookers said that its debt has more than halved thanks to positive cash flow, ​giving it the confidence to raise the dividend 20 per cent to 1.28p per share​.​

Analysts at Liberum​ said in a note: “​The first half has delivered a strong set of results and this should give reassurance to the market over full year forecasts. We take confidence from the continued strong growth in used cars and aftersales, which are the main profit contributors, and should support longer-term profit growth.”

​Analyst Matthew Taylor at Numis said: “The key September order book is healthy and Lookers has seen no significant difference in customer behaviour since the EU referendum.

“Still trading at a 25 per cent PE discount to the broader sector, Lookers remains our preferred franchised auto dealer.”

L​ookers’​ £87.5m acquisition of Benfield Motor Group last September has expanded its footprint in Yorkshire. Benfield brought two Ford dealerships in Leeds, which complement Lookers’ existing Ford dealership in Sheffield.