Car dealerships struggle in crunch

Two struggling car dealerships have hit trouble as trade conditions remain tough as recession looms.

Inchcape, which runs one of the UK's biggest leasing businesses, said it is seeking fund-raising and considering a potential equity issue.

Another car dealership, deVries, which has a £62 million a year turnover and employs 130 workers, has appointed receivers after being hit by a major fall in sales.

Inchcape said that it would meet expectations following its second profits warning in two months, despite difficulties for the industry, with figures showing car sales in the UK have dipped to their lowest annual level since 1996.

DeVries runs five Honda dealerships in the north of England. Keith Hinds of receivers Grant Thornton said the firm is hoping not to close the sites: "We are looking at maintaining as many trading operations as possible but we cannot discount the need to close some or all of the sites if buyers could not be found in the near future".

Mr Hinds added that the firm was working with Honda to protect customer deposits and aftersales service.

In a bid to cope with the economic crisis, Inchcape is spending £85 million on restructuring its European division, with 1,900 jobs going within its 17,000 global workforce.

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