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Lookers says the rise in new car sales has further to run

LOOKERS believes there is plenty of mileage left in the car sales boom, as drivers who stuck with their vehicles during the downturn use "almost unbelievable" financing deals to upgrade.

CONFIDENT: Andy Bruce says sales can still improve.
CONFIDENT: Andy Bruce says sales can still improve.

The company, which operates in Scotland under the Taggarts and Lomond brands, sold 15 per cent more cars in the first six months of 2014 compared to a year ago, beating a 12 per cent rise in the overall new car market.

"We don't think we are at the top of the cycle yet," said chief executive Andy Bruce yesterday.

"Between 2008 and 2013, there were two and a half million cars that weren't sold that would have been in previous years.

"The other aspect is that manufacturers are feeding into the demand with what are almost unbelievable financing deals."

Four out of five new cars in the UK are bought through personal contract plans, where a motorist makes monthly payments on the car for several years before trading it in for a newer model.

Mr Bruce said he believed the shift towards financing was a sustainable change in buying behaviour. "People are no longer saving up until they can pay cash for a car. They are used to paying for things monthly," he said.

Lookers has raised its outlook for the year after posting a 29 per cent rise in half-year revenues to £1.6 billion. Pre-tax profits jumped 38 per cent to £37.7 million.

Mr Bruce said his dealerships were preparing for a bumper September when the latest number plates are released, with high-end marques such as Audi in particular demand in part because of the financing on offer.

The Society of Motor Manufacturers and Traders has reported 29 consecutive months of rising car sales. The industry body expects Britons to buy 2.45 million new cars this year, up 8.1 per cent on 2013.

Several large dealerships including Pendragon and Vertu have reported growing sales and profits in recent months.

Scotland has become an increasingly important part of the Lookers business, Mr Bruce said, with 15 dealerships employing 400 people and turning over about £400m a year. The firm made its first foray into the country when it bought Taggarts in 2003.

While the looming referendum has not affected the business, Mr Bruce said he thinks "it will be good to get it over and done with and remove the uncertainty".

Mr Bruce, who joined the firm in 2000, took over as chief executive from Peter Jones at the start of the year."I've inherited a great business in good conditions, so it's reasonably easy to enjoy it. It's coincided with a buoyant market," he said.

He said Lookers will continue to add dealerships to its network on an ad hoc basis, following the acquisition in March of Colbornes and its seven sites across south east England.

Revenue from new cars across the business rose 35 per cent to £782.2m in the first six months of the year. Used cars generated £530.1m in revenues, up 24 per cent, while Lookers' aftersales business grew 21 per cent to £284m.

Lookers increased its interim dividend by ten per cent to 0.97p per share.

Shares in the London-listed company rose 1.75p or 1.3 per cent to close at 135.75p yesterday after several City analysts raised their forecasts for the company.

Peel Hunt analyst John Stevenson said he now expects Lookers to post a pre-tax profit of £61m for the year, up six per cent from his previous prediction.

"Lookers continues to take market share in both like-for-like terms and deliver a strong contribution from acquisitions," he wrote in a research note.

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