Reg Vardy shares reverse after new car sales warning

Shares in the car dealer Reg Vardy fell 11 per cent yesterday on fears of a slowdown in current trading.

Shares in the car dealer Reg Vardy fell 11 per cent yesterday on fears of a slowdown in current trading.

The Sunderland-based retailer, the second largest in the UK behind Pendragon, said it had seen a slowdown in the sale of new cars between April and June, especially in the small-car sector. Profits from new vehicle sales in the first two months of its new financial year were also below planned levels.

The warning took the shine off the group's financial results, which revealed record profits of £46.3m, up from £39.7m last year. The shares fell 60.5p to 472p.

Ed Wright, an analyst at Dresdner Kleinwort Wasserstein, said the slowdown was indicative of the lower end of the market becoming more conscious about spending. "Substitution means consumers might put off buying a new car or buy a second-hand one instead," he said. "Used cars have continued to be buoyant," he added.

The group's chief executive, Sir Peter Vardy, said: "We've grown profits to record levels, opened 18 new businesses, and added £200m to turnover. Yet the share price has dropped."

Sir Peter said that at the higher end, car sales had been doing "really well". He said: "That's both new and used Jaguars, Land Rovers and BMWs. The aim is to become 25-30 per cent specialised in high-end vehicles."

Changes in EU legislation earlier this year have meant dealerships that already have a contract with a manufacturer to sell its cars are now able to open other dealerships without seeking further permission. Reg Vardy has taken advantage of this and is set to have 100 dealerships by April next year.

"Underperforming dealerships are usually what we buy, [on Tuesday] we bought a dealership in Teesside, and we are buying another one next Monday in Yorkshire," Sir Peter said.

Sir Peter, who owns almost 24 per cent of the company, said the share price fall was an opportunity to increase his shareholding. "I am trying to buy shares at this price," he said yesterday.