SHARES in Lookers, the car dealer which runs the Taggarts franchise in Scotland, have slumped nearly six per cent after it warned Brexit vote was having an “unhelpful” effect on the UK economy.

The company, which has more than 150 dealerships across the UK, said it has seen a “softening in the new car market in recent months” amid uncertain economic conditions, leading it to approach the second half with caution.

It comes just days after the Society of Motor Manufacturers and Traders (SMMT) reported that the number of new cars registered in the UK dropped for a fourth consecutive month in July, with the market having declined by 9.3 per cent to 161,997.

Lookers itself noted that UK care sales dropped by 1.3 per cent – to 1.4 million cars - in the first half against of 2017 against the same period last year, although it pointed to a healthy order book for the crucial month of September, when the new registrations enter the market.

The economic uncertainty highlighted Lookers came as the firm, run by Scot Andy Bruce, reported a 4.5 per cent fall in pre-tax profits to £44.6m for the six months ended June 30. That was in spite of turnover from continuing operations growing by five per cent to £2.46 billion amid growth in new and used car sales. It also highlighted its growth in after-sales, driven by the huge growth in the number of new cars entering the market in the last three years.

Lookers’ chairman Phil Whitehead said: “The excellent performance of the group in the first half builds on what was already a strong comparative for the previous year. However, we have seen a softening in the new market in recent months. Furthermore, the current political environment, Brexit and the weaker exchange rates have created a degree of uncertainty in the UK economy, which is unhelpful and we therefore view the second half of the year with some caution.”

Lookers said the difficult market conditions mean it will approach the second half of the year with caution, though it noted that its performance for the full year, to December 31, should be in line with management expectations. Analyst Numis kept its forecast for the full year unchanged and is guiding on pre-tax profits of £75 million, “based on steady underlying profit enhanced by acquisitions.”

The analyst said: “Earnings seem to be proving resilient to the softer UK car new market, and we back it based on its track record, growth outlook in used and aftersales, scope for further accretive acquisitions, liquidity and returns profile.”

The company, which also trades as Lookers Audi in Scotland, said the results marked its first reporting period since it made a string of acquisitions and offloaded its parts division in the second half of 2016. Lookers, which has around 800 employees north of the Border, expanded its business with the purchase of the Knights BMW and MINI dealerships, and the Drayton Mercedes-Benz operation, in England. “These acquisitions have now been successfully integrated and are making a positive contribution to the company’s profits,” Mr Whitehead said.

The company sold its parts division to Alliance Automotive, a major European distributor of automotive and commercial vehicle parts, backed by private equity giant Blackstone, for £120m in August last year.

Lookers said profit before tax from continuing operations, excluding the parts division, grew by 14 per cent to £44.6m.

Meanwhile, Lookers declared an increase in interim dividend of 10 per cent to 1.41p per share, which followed a 17 per cent hike in its total dividend last year.

Mr Bruce said: “We have made good progress with our strategy of having the right brands in the right locations with excellent execution and have managed our portfolio of dealerships to reflect that. Our order book for new cars for the important month of September is continuing to build in line with our expectations and the new car market for this year is still forecast to be at a historically high level. We therefore believe that the company is well positioned to continue its strong performance and deliver sustainable value to shareholders.”

Shares in Lookers closed…