Despite the downturn in profits announced last week, Pendragon said it would maintain its policy of growth through acquisition.

But Mike Allen, analyst from stockbroker Panmure Gordon, predicted any further buys would only be “bolt-on” acquisitions and on a far smaller scale than the mega-deals that saw Pendragon swallow up CD Bramall and Reg Vardy in recent years.

He said Pendragon's rapid growth had left it having to assimilate a great many dealerships in a short space of time. Further expansion now was “out of the question” with the priority being to reduce net debt of £330m. “2008 will show whether they can stabilise the business. The key testing ground will be the March market,” said Allen. Meanwhile, Allen claimed that in 2006 Pendragon was achieving a net profit per vehicle sale of £385 which plummeted to £300 in 2007.

This year it aims to claw back £35 per sale. The group sold 338,000 new and used cars last year. Allen, who said 2007 had been “a horrible year” for Pendragon said 2008 would see the group embark upon a”high risk” recovery strategy. Pendragon's chief executive Trevor Finn, however, was bullish about the group's prospects after the disposal of 21 under performing sites. “We are better positioned than a year ago,” he said.