HR Owen puts car dealers in spin

THE first warning that the boom in new car sales could be over has come from upmarket London motor dealer HR Owen, which today said interest rate rises are beginning to bite.

A profits alert indicating that HR Owen will crash into the red for the second half of the year after a poor first three weeks in the key September registration month also put the skids under the shares of other motor dealers.

'Interest rates have started to bite and the effect on consumers has been more pronounced the nearer to central London you go,' said chief executive Nick Lancaster, who owns nearly 20% of the company.

'London, where we have a more financially mature community, typically reacts more quickly than the rest of the country. Corporate business has dropped off quite sharply.'

Lancaster said the upper middle-range market in BMW, Mercedes, Volvo, Jaguar and Land Rover is hurting most. 'It is tough and very much tougher than we expected,' he said.

Jaguar, whose own woes have led to parent Ford's move to close Coventry, one of its three manufacturing plants, has particularly hit HR Owen, which has about 40% of the London Jaguar market.

'Their sales plans have been too ambitious and they have not concentrated on building to customer requirements, whether that is diesels or automatics,' said Lancaster.

'Disorderly marketing has led to margin erosion and when you are in London with high property costs, then you have a problem. The company [Ford] also needs to stop mucking around by continuing to demand that their separate brands like Jaguar and Land Rover are treated as separate franchises.'

HR Owen shares plunged 30p, or 13%, to 198 1/2p, and its statement that new September registrations will 'fall significantly below market expectations' spooked the rest of the market. European Motor Holdings dived 13 1/2p, or 6%, to 199p while Pendragon fell 8 1/4p to 284 3/4p.

All eyes will now be on the official new car sales figures for September, due in the first week of October.

HR Owen pegged its interim dividend at 5p despite record sales from its Rolls-Royce, Bentley, Ferrari, Maserati and Lamborghini dealerships. Pre-tax profits for the first half of the year were up £300,000 at £1.3m.