Posted on: 18/08/2009 

Car dealership Pendragon has reported a "significant turnaround" in the first half of the year as it saw improvements in both the new and used car markets.

The owner of the Stratstone and Evans Halshaw brands said the Government's recently launched scrappage scheme had given it optimism over a recovery in the new car market.

And in the used car market prices have climbed to levels not seen since the start of 2008, with hopes for a return to growth in sales volumes in the second half.

Nottingham-based Pendragon reported underlying pre-tax profits of £8.7 million in the six months to June 30 - this is less than half the level seen a year ago, but a marked improvement on the £200 million in annual losses reported earlier this year.

Pendragon said it was benefiting from moves to cut costs, having closed a further 14 franchises in the first half of the year and kept staff numbers under constant review.

The group has already closed or sold 53 dealerships, as well as removed more than 3,000 jobs in a £60 million cost reduction programme.

Pendragon now has 279 franchises in the UK, of which 128 trade as Stratstone and 130 as Evans Halshaw, as well as 21 truck dealerships trading under the Chatfields brand.

A plunge in first half like-for-like sales volumes across its brands showed the impact of ongoing tough conditions, with a 27.3% fall for Stratstone and 33.6% drop for Evans Halshaw.

However, Pendragon is hopeful of a return to growth thanks to the 'cash for bangers' scrappage scheme and rise in demand for used cars.

Figures recently showed a 2.4% rise in national new car sales during July - the first increase since April last year as a result of the Government's incentive scheme.