Pendragon offloads in US as demand slips

Pendragon tried to reverse market fears over the state of the cars market today, unveiling the results of a strategy review that will see it sell off its US arm.

The dealer’s shares crashed 20% in October after a chunky profit warning increased fears that Britain’s cars boom is over.

Today it said it hoped to raise £100 million from the sale of its US motors group, claiming it is “economically right to sell the business at this time”.

It will also hire a new executive to oversee the used cars operations in the UK and resume a share buyback programme.

Chief executive Trevor Finn admitted in October that car buyers had become uncertain and that there were too many cars being made. A review of capital allocation in the company’s premium brands arm will see those franchises reduced over the next three years. The shares recovered, but only a little, adding 0.5p to 25.8p. At that price, the company is valued at £367 million.

Pendragon, which owns the Evans Halshaw and Stratstone brands, has been hit by concern that the car market is a debt-fuelled bubble.