Rotherham-based DC Cook, which operates 22 dealerships mainly in the Midlands and the North, was fined pounds 17,000 on Thursday in York Crown Court for selling cars that had been "clocked" - a trade term for milometer readings that under- state the truth.
There was no suggestion that DC Cook itself "clocked" any of the cars, but the company was criticised for not making adequate checks. It has set up new safeguards.
Trading standards officers are obliged to keep the OFT informed of court cases involving companies. A consumer credit licence can only be revoked in extreme cases. A revoke can cripple a company, in effect stopping it from selling goods on credit to the general public. TV retailer Colorvision, for instance, had its licence revoked in January and is now appealing against the decision to the Department of Trade and Industry.
Although the OFT would not comment on DC Cook, a spokesman confirmed: "Repeated court appearances can cast doubt on whether a company is fit to retain a consumer credit licence."
Peter Whiting, motor retail analyst at stockbroker Williams de Broe, reckoned loss of licence would be a severe blow: "Finance earnings are an important profit stream for any motor dealer. In DC Cook's case, it would be particularly hard as the group specialises in selling cars on the basis of how much can be paid a week."
Motor retailers attract more complaints than any other business. Complaints to the OFT over second-hand car deals totalled 79,167 in the year to September 1995. They led to 523 prosecutions being brought against motor traders. They were fined a total of pounds 305,528 and ordered to pay pounds 161,845 compensation to injured parties.
Last Thursday's case was the latest of a number of brushes with the law for DC Cook. In November, a subsidiary was fined pounds 4,000 by York Magistrates over misleading newspaper advertising. In July, its Worksop dealership was fined pounds 12,000 in Nottingham Crown Court for supplying cars with false readings. The court accepted that Cook had been duped into believing that a car it bought at auction and then sold had a correct mileage reading. The fines and legal costs are only a pinprick to Cook's corporate finances, although putting the matter right by replacing cars or reimbursing customers has cost the group around pounds 250,000. All the cases involved cars sold between February and June 1993.
Cook's interim profits to last October were 28 per cent better at pounds 2.01m. However, court appearances are causing huge embarrassment in a period of rapid expansion for the company. Last September, it unveiled plans to establish what could become the largest second-hand car centre in Britain by combining five dealerships on to a single 12-acre site in Barnsley.