Rise in demand for used cars

Lookers car dealership has said it has seen an increase in demand for second-hand cars as the economic downturn has a negative effect on new-car sales.

The Manchester-based company has said that although the number of sales remained lower than last year it is "now starting to see an increase in both volumes and margin".

The firm is expecting to see profits of at least £10 million this year, but it said it would be spending £12 million in cost-cutting measures, due to the "increasingly challenging" conditions, leaving the company with an overall loss for 2008.

A combination of a fall in demand and a reduction in banks lending has meant car dealerships have fared badly in the current economic climate.

Sales of new cars fell 37% in November compared with a year earlier and this has had a knock-on effect in the used-car market.

However, all of the company's dealerships, which operate under the Lookers, Charles Hurst and Taggarts brands, have said they have seen continued growth in after-sales business.

Its independent parts business is also holding up, benefiting from the falling price of fuel, which makes it cheaper to distribute products.

Copyright © Press Association 2008