Dagenham defies pressure and produces a record

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Dagenham Motors, one of the UK's largest Ford dealerships, saw record sales and profits at the halfway stage, despite intense pressure on margins on the sale of new cars. The company comfortably outstripped the market average with new car sales up 40 per cent to 5,587 vehicles in the first six months to end-June. Ford was the only major player not to lose UK market share in the period.

However, David Philip, chairman, said: "Although the profits contribution from new vehicles was up 34 per cent, gross profit per vehicle is still below that needed to support an acceptable return on investment."

Margins were good in the first quarter, he said, but fell in the second quarter as manufacturers kept their powder dry for the August rush.

Sales of more than 11,000 new and used vehicles helped boost turnover by 32 per cent to pounds 134.3m (pounds 101.7m) with pre-tax profits advancing 38 per cent to pounds 2.5m.

Used car sales were up 13 per cent at 4,436 vehicles, and contributed 19 per cent to profits. Margins and residual values of used cars remained steady, Mr Philip said. Sales of new and used commercial vehicles are trucks also rose.

The second half of the year had started well with profits ahead of last year's record in the all-important month of August. But Mr Philip was cautious about prospects for the second half, saying that as in previous years, the outcome for the full year "will depend on the resilience of used car residual values, which held up comparatively well this time last year."

Future new car sales should be helped by Ford's prolific new model programme, which includes the imminent introduction of the Galaxy seven-seater luxury car and the new Fiesta.

The company intends to add more dealerships - both Ford cars and Iveco commercial vehicles - and has a number of sites under review. However, there are still no immediate plans to begin selling Jaguar or Aston Martin, Ford's other two marques. "But it will probably happen eventually," Mr Philip said.

In the highly competitive after-sales market, which has seen substantial discounting, Dagenham's operation saw a 23 per cent rise in turnover and 26 rise in profits. Mr Philip said that more Rapid Fit service centres would be added to the dealerships.

Browning Electric, the company's lift repair business, made a profit of pounds 27,000, against a pounds 74,000 loss last time. The interim dividend is raised 10 per cent to 2.2p.