ONE of Britain's biggest motor dealership groups has cut 500 jobs amid warnings of a sharp downturn in used and new car markets.
Pendragon, owner of the Evans Halshaw and Stratstone chains, said it had shed the staff from its 15,700-strong workforce to cope with the tough climate, adding it was "difficult to forecast" prospects this year.
The firm, which holds more than 300
franchises across the UK, including about 30 north of the Border, said national car registrations had fallen significantly in May.
Private new car numbers fell by 9.5 per cent, with registrations for small business vehicles down by 15.4 per cent, it added.
Britain's car dealers are starting to feel the pinch from a triple whammy of tighter credit markets, an increasingly vocal environmental lobby and soaring fuel costs.
Although Pendragon sought to reassure the market that sales volumes remained "robust" and the group was profitable, shares plunged 23 per cent to 15p after it said the volatile state of the market made forecasts difficult.
Panmure Gordon analyst Mike Allen – who has already lowered profit forecasts for Pendragon by about 15 per cent – said "things (are] likely to get worse for Pendragon before they get better". He added: "While we downgraded our forecasts in anticipation of poor trading in May and June, we do not have much confidence in these at present and they could prove now best case."
In February, Pendragon reported a 50 per cent slump in annual profits before tax and one-off items to £34.8 million, although the result was slightly ahead of City forecasts. Revenues were flat at £5.1 billion.
Pendragon is more exposed to a UK market slowdown than rivals such as Inchcape, which gains just 40 per cent of its turnover from the UK and has offset the difficult conditions with stronger growth in emerging markets such as Russia, China and the Baltics.
Pendragon, which represents a range of marques from Kia and Nissan to Jaguar and Aston Martin, yesterday warned investors: "It is unclear at this time as to whether the level of activity decline seen in May, which appears to have continued ... in June, will persist for the remainder of the year.
"Our current view is that it will and that there will be a continuing exposure to any further slowdown in the general economy."
The full article contains 401 words and appears in The Scotsman newspaper.
