Ian H Cameron, which owns Perth-based Strathmore motors, saw pre-tax profits fall 22% in the year to May 31, to £311,000 from £401,000 as the economic downturn hit sales of cars.
The latest accounts for the firm also show sales fell 3% during the year, to £13 million from £13.4m.
In their report accompanying the accounts, directors said that although car sales had been affected by the downturn, other departments had traded in line with the previous year.
The company, which began retailing new Volvos in 1958, also sells pre-owned models and services cars.
Directors said the firm, owned by Ian Douglas Cameron, had enjoyed another successful year, in spite of trading conditions.
The directors' report suggests the car trade is still an attractive industry for some firms. The directors added: "The company retains an exceptionally strong balance sheet, being substantially cash-positive and having net current assets of £2,406,797."
The company said it paid £100,000 of interim dividends in the year to May, in line with the preceding year. Directors' remuneration totalled £95,500 in the year to May and in the preceding year.
The average number of employees during the latest year was 33, up from 32.
Last week the Society of Motor Manufacturers and Traders said new car registrations rose 11.3% in November, making the UK Europe's second largest market. Sales rose 5.4% in the first 11 months of 2011.