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Car dealership Lookers hit by crumbling demand

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By Reuters
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By Yadarisa Shabong

(Reuters) – British car dealership Lookers <LOOK.L> warned on full-year profit on Friday, saying trading was increasingly challenging and prompting a 30% fall it its already weak shares.

The British car industry has been hit by lower vehicle sales amid uncertainty caused by stricter emissions regulations, Britain’s impending exit from the European Union and a shift towards sales of electric or hybrid cars.

“The more recent challenging conditions are likely to continue into H2, exacerbated by continued weakness in consumer confidence in light of wider political and economic uncertainty, and further pressure on used car margins,” Lookers said.

Shares in Lookers, which disclosed a regulatory probe and the exit of its finance chief in recent weeks, fell about 30% to more than a decade low and are on course to lose more than half of their value this year.

Lookers, which now has a market capitalisation of £180 million, gave no further details of the investigation by Britain’s financial watchdog into its sales processes over the last three years.

Lookers which sells vehicles for multiple manufacturers, including Volkswagen <VOWG_p.DE>, Ford <F.N> and Germany’s BMW <BMWG.DE>, is the latest company in the automobile sector to issue a profit warning.

Luxury carmaker Daimler <DAIGn.DE> warned on Friday that it expected a second-quarter loss and Pendragon <PDG.L> last month warned of a pretax loss this year.

British car production fell by 15.5% in May, the twelfth month in a row of declines due to model changes and falling demand at home and abroad. New car registrations have also taken a hit, falling 5% in June.

“While comparatives weaken materially in H2 for new car sales, the timing of the next Brexit deadline has the potential to be highly disruptive,” Peel Hunt analyst John Stevenson said.

Lookers said underlying pretax profit for the first half of the year is expected to be about £32 million, compared to £43 million a year earlier.

(Reporting by Yadarisa Shabong and Pushkala Aripaka in Bengaluru; editing by Bernard Orr and Alexander Smith)