Manchester’s Lookers defies car market slowdown

Lookers CEO Andy Bruce

Manchester-based Lookers plc, the UK’s biggest car dealership, said in a trading update that its turnover of new cars increased 10% in the nine months to September 30 — and 5% on a like for like basis — despite a prolonged slowdown in the UK new car market.

The new car market represents 35% of Lookers’ gross profit.

Lookers said it will soon announce a share buyback. The company’s’ shares rose about 2%. 

Lookers said the used car market — which contributes 25% of the firm’s total gross profit — “continues to be buoyant.”

Turnover of used cars at Lookers increased 24% in the nine months — and 14% on a like for like basis.

After a strong start to the year, the UK new car market has decreased since April and by the end of September, total UK registrations had reduced by 3.9% compared to the prior year, with a reduction in quarter three of 9%,” said Lookers.

“Industry forecasts by The Society of Motor Manufacturers & Traders (SMMT) for the full year are now at 2.57 million, a reduction of 4.7% compared to last year, although this remains historically a very high level of registrations.

“We are pleased to report that our key manufacturer partners recognise the more difficult trading environment and are taking pragmatic and supportive actions such as reducing targets, increasing tactical incentives and helping us to reduce operating costs which will offset the effect of lower new car volumes going forward.”

Lookers said its higher margin aftersales business, which represents 40% of total gross profit, performed well in the period and during the nine months to September 30 saw turnover rise 11% — 4% on a like for like basis.

In its outlook, Lookers said: “The group has had a positive financial performance for the first nine months of the year, against strong prior year comparatives.

“We have a strong balance sheet which continues to be supported by operational cash flow and our level of net debt to EBITDA has improved.

“We 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.

“In light of the softening in the new car market since April, as various factors impact on consumer confidence, we continue to plan prudently for the business.

“However, based on the progress seen in the year to date, the board is confident that the group will make further progress during the remainder of this year and believes that the results for the year ending 31 December 2017 will be in line with management’s current expectations.”