Major car dealership Lookers blames Brexit for profit warning

Wednesday 17th July 2019 05:43 EDT

One of Britain's biggest car dealerships, Lookers, has suffered a major setback as shares of the company tumbled another 30 per cent after the firm issued a profits warning blaming increasingly challenging trading conditions. Lookers has warned that weaker margins will push first-half profits down by 25 per cent to about £32m, and full year figures will also fall below forecasts, as customer confidence is hit by continuing political and economic uncertainty.

Britain's car manufacturers and traders have been buffeted by headwinds, including the collapse in diesel sales after the emissions scandal, and Britain's looming exit from the EU. Lookers chief executive, Andy Bruce blamed Brexit for the falling sales, preventing a "record car market" from developing. The company said the recent challenging conditions are likely to continue, made worse by weakening consumer confidence amid political and economic uncertainty and the growing pressure on used-car margins.

The company imports several vehicles it sells from multiple manufacturers, including Volkswagen, Ford, and BMW, and are now at their lowest point since 2009, valuing the firm at £180m. They took a hit by halving overnight after the 2016 referendum and tumbled 20 per cent last week when Lookers disclosed that the regulator, the Financial Conduct Authority, had opened an investigation into its sales processes. Things only worsened when its chief financial officer, Robin Gregson announced his departure.

New car registrations in the UK fell 4.9 per cent in June, while British car production fell by 15.5 per cent in May, the 12th successive month of declining output. Analysts at Liberum said that while Lookers had outperformed the car retail market in recent years, "this momentum now seems to be lost". They added that investors would want clarity on the regulatory investigation and possible costs.

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