Reg Vardy upbeat despite profits fall

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Reg Vardy, the Sunderland-based car dealer, yesterday remained upbeat about its prospects despite unveiling a 25 per cent drop in annual profits.

The company, which has 75 dealerships across the UK, said business had picked up strongly as lower prices stimulated demand for new cars since the start of the year.

Pre-tax profits fell to £24.3m in the year to April as British car buyers held off from making purchases in the final months of 2000 expecting prices to come down sharply.

Uncertainty in the market followed a Competition Commission investigation into overpricing in the UK market that resulted in the government ordering car makers to offer car dealers the same prices as companies buying fleets of cars. It has taken the manufacturers several months to comply.

Sir Peter Vardy, the chairman, said the company's performance had been "impressive" despite the fall in profits given that last year was one of the most difficult for motor retailers for 30 years. New and used car sales rose from 155,086 to 161,943 while turnover grew 1.7 per cent to £1.3bn.

"Since 1 January we have seen a much more positive retail environment as a number of uncertainties have been resolved," Sir Peter said.

Profits in January, February and March were 7 per cent higher than in the first quarter of 2000 and the strong performance continued in April and May. The company believes low interest rates and high levels of disposable income are boosting trade along with falling prices. The company plans to expand its network to 100 dealerships within the next 18 months to two years if it can find suitable sites.

Shares in Reg Vardy, which has up to £60m to invest in expansion,closed up 3p at 334p. The shares have outperformed the stock market by 55 per cent since the beginning of January.