At the top five group's AGM chairman Phil White said despite the pressure on the new car market Lookers was now seeing a positive return from the 31 Dutton Forshaw sites it bought last year for £53m and was also benefiting from the return to profit of its used car supermarket operation.

“Our franchised network division earns its revenues from both new and used cars and aftersales,” said White.

White said the group's Charles Hurst division in Northern Ireland struggled in the first quarter of 2008 with like-for-like new sales down 5 per cent despite out performing the market in the province overall.

Used retail sales also suffered in Northern Ireland but White said the impact of the Dutton Forshaw franchises and strong aftersales business offset the challenging conditions.

White said the overhaul of the supermarket division had paid off with the operation now “trading profitably from a lower working capital base”.

He said Lookers independent aftermarket parts business had continued to thrive in 2008. Last year the division, together with aftersales from franchised outlets, contributed 54 per cent of the group's gross profit.

Lookers also expects to benefit this year from last month's acquisition of two Volkswagen dealerships and a contract hire and leasing business from Bramall & Jones for £1.75m, despite assuming some debt with the deal.

Lookers is relocating its FPS branches in Liverpool, Glasgow and Bristol to larger premises to support growth in the parts operation – a process it expects to complete by the end of the year.

Although mindful of the current uncertainties within the UK economy, White said Lookers was confident of delivering growth in 2008 provided there was no further “significant deterioration” in economic conditions.

“Overall we have started the current financial year with a much stronger business compared to last year, albeit we remain cautious about organic growth in new car sales,” said White.