News

Car dealer Inchcape expects underlying results for 2008 to be below consensus and 2009 to be "significantly" below expectations as job cuts are expecte to reduce costs.

The group said trading conditions have deteriorated significantly in the UK and are weakening in a number of its other markets due to the events in the financial markets and weaker consumer confidence.

It expects these factors will result in current trading conditions remaining tough for the rest of 2008 and throughout 2009.

Inchcape will undertake a "substantial overhead reduction programme" to "right-size the business" in the light of current difficult conditions.

"Following this deterioration in trading conditions and assuming this may continue for the foreseeable future, prompt and strong actions to reduce our cost base to a level appropriate to current market conditions are being taken," it said.

To reduce costs, the group will undertake a restructuring process across all its major markets, particularly the UK. The cost of the restructuring will be £55m and once completed is expected to save approximately £50m per annum.

It will also concentrate on selling parts and services, which accounts for 50% of its trading profit, rather than new cars.

Group sales for the nine months were up 6.7% in sterling terms and in line with the same period last year in constant currency. Like for like group sales were down 1%.

UK new car market fell by 18.8% in the three months to 30 September. The group said even though its UK business outperformed the market, it was being affected by the significant slow down in sales, with like for like sales down 10.8%.

In Europe, trading conditions are becoming more difficult. Its Hong Kong and Singapore businesses traded in line with expectations, though it expects these markets to slow.

"The global financial crisis and its consequence on the real economy is clearly affecting consumer confidence mainly in the mature markets and this is having an impact on the purchase of big ticket items," said CEO André Lacroix. "We are not immune from the current industry slowdown and we are taking appropriate actions to right-size our cost base."