Demand for cars fuels sales surge at Lookers

Car retailer Lookers said pent-up demand and the ongoing trend of private car use instead of public transport led to a solid growth in third-quarter sales.

Lookers has dealerships across the region
Lookers has dealerships across the region

But the company, which has sites in the Black Country, Shropshire and Staffordshire, warned it is expected to record a "material" adjusted pre-tax loss for the first half due to temporary closure of dealerships in the period.

In the first half of 2019, the company recorded adjusted pre-tax profit of £29.2 million on revenue of £2.65 billion.

"Trading in quarter three resulted in underlying pre-tax profit significantly ahead of last year. Quarter four will benefit from the full impact of the group's restructuring activity, however the board remains mindful of the ongoing uncertainty regarding Covid-19 and the possible impact on the UK car market," Lookers said.

Lookers, which has now opened all of its dealerships, sold 42,000 new and used cars on a like-for-like basis in the three months to September 30, 14 per cent higher than the year ago period.

"This growth was fuelled by the release of pent-up demand from over two months of closure and the ongoing trend of private car use instead of public transport. We have also had a good customer response to our improved, simplified and more digitised sales process, which has helped boost our performance."

The "better than expected" quarterly trading was further supported by cost savings, outperformance of the UK retail new car market, robust aftersales revenue and strengthening of used car margins.

Lookers said new car sales in the third quarter were up by 27 per cent on last year, outperforming the UK market, which saw broadly flat registrations.

Used car sales in the period were 6.2 per cent above last year. In addition to volume growth, robust residual values have supported significant margin growth, Lookers explained. Quarterly like-for-like service revenue was up 7.4 per cent.

Shares in the company are currently suspended from trading, pending publication of its 2019 results. Lookers expects to publish its 2019 annual results and first half 2020 accounts in November.

CEO Mark Raban said: "Our decisive self-help measures, combined with better than expected trading in quarter three and strong support from our brand partners, have helped the group emerge from lockdown in a strong position. Naturally, we remain cautious around the future outlook given the ongoing Covid-19 backdrop but we are well positioned to deal with any emerging challenges."

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