SALES of new and used cars are down as people continue to tighten their belts, according to Gateshead motor dealer giant Vertu.

The group, which has 80 dealerships nationwide and mainly operates under the Bristol Street brand, said it was prepared for the drop because the Government’s scrappage scheme has ended.

It budgeted for the decline and will tell today’s annual general meeting (AGM) that profits are better than it expected for the four months to the end of June.

Like-for-like new car sales to private customers fell by 6.6%, which was better than the UK average drop of 17.1%. The biggest fall was in Vertu franchises selling Japanese-made motors, because car production was hit by the devastating earthquake earlier this year.

Used car sales dropped by 9% in March, but the trend improved in May and June so sales for the four-month period dipped by a total of 5.8%.

Chairman Paul Williams said: “The fragility of UK consumer demand in the retail sector has become more apparent, placing pressure on volumes in both the new and used car markets.

“The continued devaluation of Sterling also resulted in pricing pressure on new cars and reduced levels of manufacturer support available to stimulate the retail market, causing margin pressure on retailers.”

Vertu is aiming to take advantage of the weak economy by snapping up more dealerships as they become available.

Mr Williams said: “Whilst UK consumer demand remains fragile and vehicle sales remain under pressure in the short term, further acquisition opportunities are likely to arise as a result of these market conditions.”

Vertu opened a Hyundai dealership in Peterlee earlier this month, a Nissan dealership in Glasgow and took over a Mazda dealership in Bristol in June.

The company is on course to break through the £1bn annual sales mark after reporting record revenues of £999m earlier this year.