Rolls-Royce dealer hit by interest rate rises

HR Owen, the upmarket car dealership which represents marques such as Rolls-Royce, Bentley, Ferrari and Lamborghini, sent shock waves through the sector yesterday by warning that recent interest rate rises were hitting sales badly.

HR Owen, the upmarket car dealership which represents marques such as Rolls-Royce, Bentley, Ferrari and Lamborghini, sent shock waves through the sector yesterday by warning that recent interest rate rises were hitting sales badly.

Shares in the group, which has 40 dealerships around the country selling makes ranging from Maserati and Lexus to Jaguar, Land Rover and BMW, fell 12 per cent to 201p. Other quoted car dealerships also felt the backlash, with shares in Caffyns, Lookers, Pendragon, Reg Vardy and EuroMotor all falling sharply.

HR Owen said that registrations in September, one of the two most important months of the year because of the number-plate change, were expected to fall "significantly below" earlier expectations. The overall market for the month is likely to be down by about 10 per cent on September last year and the company said it expected sales to weaken further in the remainder of the year.

While the group said it expected to remain profitable for the year, after making profits of £2.2m in the first half, the 12-month results would be "substantially reduced" by its trading performance in the second half. The company said it had also been affected by the cost and time involved in re-jigging dealerships acquired from other retailers last year.

Nick Lancaster, the chief executive of HR Owen, said the slowdown was most marked in sales of mid-range cars such as Volkswagen and Smart, part of the DaimlerChrysler group, although registrations of Jaguars, Land Rovers and Volvos in London had also suffered, putting substantial pressure on profit margins.

Half of HR Owen's dealerships are in London. Mr Lancaster said the nearer its business got to the capital, the more its customers were sensitive to the increases in interest rates.