AN increase in fleet business has failed to stop a slide in profits at Lookers, the motor dealership group. Pre-tax profits in the year to September 30, 1998 dropped to £8.6 million (1997: £9 million) on turnover down from £606.8 million to £584.5 million.

The company's performance represents a turnaround in fortunes for the Manchester-based firm following record pre-tax profits of £9 million in 1997. The main cause of the fall was a £600,000 drop in profits in Lookers' agricultural machinery division due to the BSE crisis, but the company also blamed pressure on car prices and, like many other dealer groups, has warned of a tough year ahead.

Although the company increased its fleet sales significantly, it said this was tighter margin business which drew a fine line between volume and profitability. Overall, Lookers grew its new and used car volumes by 7.5% and 10% respectively, but this success was undermined by the market-wide slide in residual values.