Lookers highlighted the â€œresilience and diversityâ€ of its business model as it outperformed the market with a 4% downturn in new car revenues but growth from used cars and aftersales.
In a trading update covering the three months to March 31 the AM100 retail group reported new car registrations reduced by 12.4% to 718,489 cars but revenues from new cars decreased by 4%, a figure it described as â€œsignificantly better than the total market reduction of 12%â€.
Total gross profit from new cars â€“ 33% of gross profit for the group â€“ reduced by 8% with a modest reduction in profit per unit, it added, commenting that the comparative period of 2017 was particularly strong due to Aprilâ€™s changes in VED road tax.
Used cars now contribute 26% of total gross profit for Lookers and the group saw sales revenues in this area increase by 8%, with gross profit improving by 6% compared to the prior year.
Aftersales generated a 2% increase in gross profit and now represents 41% of the groupâ€™s gross profit.
Lookers also announced the completion of activity in the property market during Q1, with the sale and leaseback of two properties generating Â£30 million in profit.
The group said: â€œThis has had a positive and beneficial impact on cash flow in the period as well as helping to fund our capital expenditure programme.â€
In a statement issued by the London Stock Exchange Lookers described its performance in Q1 of 2018 as positive â€œagainst very strong prior year comparatives for the new car market and in an ongoing environment of subdued consumer confidenceâ€.
It added: â€œThere continues to be strong momentum in both our used car and aftersales businesses, demonstrating the resilience and diversity of the group’s business model.
â€œWe have a strong balance sheet which continues to be supported by operational cash flow and our level of net debt to EBITDA has improved.
â€œWe also have substantial headroom in our bank facilities which gives us flexibility and capacity to develop the business through further acquisitions at a time when there are significant consolidation opportunities within the sector.
â€œThe financial performance of the group in the period demonstrates the effectiveness of our strategy of having the right brands in the right locations.
â€œThe trading performance since March has been encouraging and we expect to make further positive progress during the year.â€
Market analysts at Peel Hunt advised investors to buy shares in Lookers, stating that their current pricing â€œprimarily reflects concerns over the new car market and consumer financeâ€.
Peel Huntâ€™s report stated that Lookersâ€™ Q1 performance had been encouraging, stating: â€œThis is a much better performance than we had feared given the market data and competitor performances (Pendragon reported 13.3% decline in new car revenues and 17.6% decline in GP).â€