UK car dealership sales rise as Covid drives people off public transport | Automobile industry

Car dealers reported an increase in sales of new and used vehicles in July as buyers rushed to find alternatives to public transport following the easing of coronavirus lockdowns in the UK.

Struggling Lookers chain said sales of new and used cars rose 17% in the generally calm month compared to 2019, after revenues fell by £1billion in the first half – a fall by 38%.

Vertu, the UK’s fifth-largest dealership, said new car sales rose 18% year-on-year in July, while used sales rose 14%. Vertu said it made an adjusted pre-tax profit of £7.4m in July, more than offsetting the £5.2m loss during the lockdown months of March to June.

The auto industry is hoping a rebound in sales thanks to pent-up demand will help it recoup some of the losses suffered during the lockdowns, when showrooms were forced to close. Showrooms in England were allowed to reopen on June 1, but it was not until June 29 that all UK dealers were able to let customers in.

Vertu and Lookers said there was pent-up demand from customers unable to buy during the shutdowns, providing welcome relief to an industry that was already under pressure from the shift to online sales before the pandemic.

According to a survey by Close Brothers Motor Finance, some 95% of UK car dealers are confident their business will survive the impact of the pandemic, with growing sales of generally cheaper used cars seen as the biggest opportunity.

However, the industry is nervously eyeing September, the crucial month for new sales when license plates change. The Society of Motor Manufacturers and Traders, the UK lobby group, has warned further job losses could occur if sales through September disappoint.

Lookers has already laid off 1,400 workers, though 100 less than originally announced in June.

Mark Raban, chief executive of Lookers, is cautious about the outlook for the industry.

“It’s been a very difficult time for Lookers, but it’s encouraging that we’re starting to see healthy signs of vehicle sales picking up since the lockdowns eased,” he said.

The company also announced that it had extended the scope of its 2019 audit, forcing it to delay its 2019 earnings statement after an investigation revealed potentially fraudulent transactions. In June, the group set aside £19m to cover the difference.

In a statement to the stock exchange, Lookers said: “The extended scope of the audit identified additional work on the group’s corporate leasing division and vehicle finance agreements and 2018 and prior balance sheets to ensure a correct identification and allocation of adjustments. Additional work is underway to finalize the 2019 accounts.”

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