It is now targeting a number of sites, and has already agreed three non-binding heads of terms for a £10.8m acquisition of a five-site dealership, a £1.2m freehold property in the Midlands which would expand its Honda franchise.

Chief executive Robert Forrester said: “We are finding that people still want to buy cars, despite the problems faced by others in the industry. With valuations at such a low level, we have the opportunity to grow our business and strengthen our position in the market in time for the recovery.

“As a firm that has its roots in the North East, we would be looking to add the majority of new jobs in the region.”

Mr Forrester is backing the Government’s car scrappage scheme – where car buyers are given a £2,000 discount on a new car if they scrap one that is at least 10 years old – and said that this would help to stimulate the sale of new vehicles at its dealerships.

A broker note from Brewin Dolphin, which is handling the sale of the shares, said: “We think the fundraising at a minimal discount is a strong endorsement of management and with a number of targets already identified, and we look forward to further acquisitive growth which will take the business to the next level in terms of scale and profitability.”

Andrew Davison at Muckle LLP, which is helping the firm with the share placing, said: “The fact that the firm is still adding to its war chest with an intent on investing is very encouraging.”