Lookers trading solid despite falling new-car sales

After years of growth, supported by cheap finance deals, sales of cars went into reverse in April and have fallen each month since. In September, usually a strong month for the industry because licence plates change, sales fell for the first time in six years.

Motor manufacturers have said falling sales, blamed partly on weak consumer confidence, are very concerning. Pendragon, Britain's biggest car dealer, was forced to issue a profit warning in October.

But Lookers said gross profit from new cars rose 15% in the first nine months of the year with overall trading holding up at the end of the period.

"The company produced a positive trading performance in the third quarter, with a solid result during the important month of September," Lookers said in a trading update.

The company said new cars make up 35% of its gross profit. It said manufacturers are reducing targets, offering new incentives and helping reduce operating costs.

The used car market, which makes up a quarter of Lookers' profit, remains buoyant and high-margin after-sales business has performed well, Lookers said.

Lookers said it would buy back shares because doing so is good value for shareholders after the shares fell by more than 20% since the start of June.