Shares dived at Pendragon as the car dealer announced a review into operations after it fell to an unexpected loss.
The Evans Halshaw and Stratstone owner saw first-quarter like-for-like gross profits slide 5.4% on new cars, 1.6% on used cars and 5% on aftersales, which includes servicing and repairs.
The dealer said it was impacted by “challenging trading conditions” and increased operating costs.
Combined with increased losses within its Car Store vehicle supermarket arm, this resulted in an underlying pre-tax loss of £2.8 million.
The performance fell around £10 million short of board expectations, comprised of around £7 million from the impact falling margins, around £2 million from cost increases and £1 million from the worse-than-expected performance of Car Store, which increased from 26 to 34 sites last year.
Car sales have steadily fallen as nervous consumers hold off on big-ticket purchases.
Dealers have reduced prices to drive an increase in sales but have seen margins hammered as a result.
UK new car registrations declined by 3% last month, as the uncertain political climate has weighed on consumer sentiment.
Nevertheless, group like-for-like revenues rose 4.6% in the three months March 31.
Like-for-like new car revenues rose 6.3% against the previous year, while used car and after sales like-for-like revenues rose 2.9% and 5.5% respectively.
The review was called by Pendragon’s new chief executive Mark Herbert and finance chief Mark Willis, who both joined the company in February 2019.
The results of the review will be announced in June.
In October 2018, the company issued a profit warning, saying that new EU regulations on vehicles had disrupted supply.
Shares dropped 6.8% to 23.4p in morning trading.