Pendragon warns of £30m losses

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The Independent Online

The car dealership group Pendragon warned yesterday it expects to make a full-year loss of £30m as the result of a slump in sales, and the costs of a large redundancy programme.

The company said the economic downturn has had a "significant impact" on new car registrations in 2008 which have fallen "considerably more" than 12 per cent. It said registrations in October were down for the sixth consecutive month, and have dropped 21.4 per cent over the past three months.

"The used car market has also been more difficult in the past four months with prices falling by approximately 5 per cent per month on average, with executive and large 4x4 vehicles hardest hit," the company said.

Pendragon has made more than 2,500 staff redundant – 20 per cent of its workforce – since 1 July. These redundancies will cost £3m this year, but offer a future annualised saving of at least £40m. By the end of 2008, the company will have closed 75 dealerships since June 2007. Trading losses and the cost of closing dealerships this year have been £12m. "Assuming no significant further downturn" in the final months, it expects an annual loss before exceptional items of £30m for 2008. Its shares gained 0.89p to 6.15p yesterday.