European Motor dented

RUSSELL HOTTEN

Shares in European Motor Holdings plunged 18 per cent as the car dealership issued a profits warning that underlines the poor state of UK automotive sales.

The company blamed bad weather for keeping buyers at home and product changes for its poor performance. Analysts said that European Motor was unlikely to be the only car retailer to issue a gloomy trading statement.

Analysts had been expecting full-year profits to 31 March of around pounds 8.5m, but European Motor said yesterday that the figures would be around pounds 6.5m. Promises that the final dividend would be maintained at last year's level of 3p did not stop the shares falling 18p to 82p.

The company, whose franchises include Rover, Nissan, and Citroen, said the first eight months of trading were in line with expectations, but business took a dive in December and January. "This is partly due to severe weather conditions.... Changes in product cycles by our key manufacturers have also affected retail sales," the company said. New dealerships, including Jaguar, Fiat and Renault, had not performed well, but the company believed these were "due to the one-off nature of the trading problems." European Motor's main trading areas are in the North and Midlands, which have been badly hit by the winter weather.

David Banks, of Panmure Gordon, said the warning was not entirely unexpected, adding that it was only getting a 1 per cent return on sales.