Car crash as Lookers puts out another alert and axes top duo

THE strife in the British car market accelerated on Friday when top dealer Lookers issued its second profit warning in less than four months and axed its top two executives. Lookers, which sells leading brands including Renault, Ford, Vauxhall, Fiat and Peugeot from forecourts across the country, has been one of the mainstays of the industry for decades.

New car sales have been falling for months on Brexit uncertainty and the shift to more environmentally friendly models. Lookers warned that profits for the year will be just £20 million, down from £64 million last time. That’s far worse than already-pessimistic analysts had expected.

The shares crashed 30% to their lowest since 1990, before recovering some losses to fall 14% to 43p. Chief executive Andy Bruce and chief operating officer Nigel McMinn will step down with immediate effect. Chairman Phil White will run the business until replacements are found. Lookers said trading “particularly over recent weeks since mid-September, has been much more challenging than expected”. Sales for the past three months are down 11.5%.

Liberum said in a note: “The market has clearly been tough and brand exposure has not helped, but there are deeper operational issues at play here which have resulted in the CEO and COO stepping down. “We think cost and working capital control will be an immediate focus.” Other analysts assume Lookers will have to scrap its dividend. The dive in the share price is a hit to the paper fortune of non-executive director and largest shareholder Tony Bramall.

The trouble at Lookers mirrors that at arch-rival Pendragon. Shares in Pendragon, Vertu Motors and Auto Trader fell today. In June Pendragon said it would make a loss this year due to a jam of unsold vehicles. The Society of Motor Manufacturers and Traders has partly blamed Government policy for the difficulties faced by the industry.

The trade body says an anti-diesel drive and cuts to incentives for plug-in cars have caused confusion among consumers. The SMMT’s latest report showed car factory output fell 3.8% in September on the same month a year ago, as 5000 fewer cars came off assembly lines. Yesterday, Lloyds Bank said that lower used-car prices are hitting the group’s auto finance arm.