Shares in UK car dealer Lookers jumped on Wednesday as the robust second-hand car market boosted sales.
They rose 9 per cent to 80.90p by early afternoon after surging nearly 20 per cent earlier as the group clawed back some losses since February. The share price remains 20 per cent lower since this year’s peak on February 10.
However, Lookers warned that the souring economy and rise in the cost of living could hit consumer confidence.
“There has to be some impact on consumer confidence — we all feel that,” said chief executive Mark Raban.
“[But] we represent a number of brands from premium German brands down to more volume orientated brands — we do have a range of products and makes in our business — so I think that does give us an element of protection,” he said.
The jump in sales highlights the changing fortunes of the group that had to suspend its shares in 2020 after it failed to publish its accounts on time.
Total revenue rose 3.6 per cent to £2.2bn in the first half from the same period a year ago, while sales of used cars rose 16.7 per cent to £1.22bn.
Underlying pre-tax profit stood at £47.2mn in the first half, comfortably ahead of forecasts, against an exceptionally strong £50mn in the first half last year, which benefited from £12.7mn of government support.
New car sales in the UK fell to their lowest level in two decades in April as the global shortage of semiconductors hampered output. July registrations fell to 112,162, which was 9 per cent down on a year earlier.
However, the shortage of new cars boosted Lookers’ average sale price for used cars, which rose 27 per cent in the six months to June.
Raban said some customers may have been encouraged to purchase a car through finance deals because they think interest rates are set to rise, which could make these agreements more expensive.
The majority of new cars and a growing portion of used vehicles are purchased in the UK through three-year leasing deals or similar agreements.
The company also outlined energy-saving measures to combat the rising cost of fuel.
Raban said utility costs rose by £5mn in the first half. “To be absolutely honest, we’re turning everything off that we can because that’s good for costs, but also good for the environment,” he said.
He added that the company discovered that 35 per cent of its energy use was while it was closed. “We’ve started to install solar panels and various other energy-saving devices like motion detectors on some of our escalators.”
The car dealer also changed the way showrooms are lit. “We’ve got a lot of glass in our showrooms . . . we are routinely now turning off the showroom lights in some dealerships where natural light will suffice.”
The group also announced an interim dividend of 1p a share.