Bottom Line: Lex motors back

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FOR LEX Service, the motor dealer and distributor, losing the right to import Volvos in March last year was like having its big end blow out.

Coming as it did in the middle of recession, it made urgent repairs necessary. Lex's five-year profit record reads badly. Operating profits of pounds 72m in 1988 dwindled steadily to pounds 11m last year. Over the same period Lex shares have underperformed the market by 35 per cent.

But recently Lex has broadened its approach. Instead of concentrating on retail dealerships and Volvo it is now into leasing, servicing and parts. A deal announced yesterday, which could be worth up to pounds 38m, to import, distribute and finance Korean-made Hyundai cars gives Lex the seal of roadworthiness once again.

Hyundai's contribution will do well to approach a third of Volvo's. In the 12 months to June Hyundai sold one-fifth of the cars Volvo did.

The Swedish marque is not matched by its Korean replacement either, but Hyundai could do well in the cost-conscious Nineties.

It is also important that Lex is back importing and distributing cars. Profit margins reach double figures here compared with measly single figures from the forecourt.

You cannot fault the timing, either. Latest new car sales figures are 11 per cent ahead, car production is up by one-fifth and the crucial August season of new registrations beckons promisingly.

New investors will have missed the best, but the shares are still on the buy list.