MOTOR business Perry group has predicted a 'more challenging' second half of 2000, claiming car sales may not pick-up until next year.

The company, which includes dealerships, a contract hire business and a motor accident repair operation reported pre-tax profits for the six months to June 30 down 20% to £2.45 million on turnover down 5% to £229.78 million.

Although all major sectors of the business reported increased pre-tax profits, the company took a £666,000 hit in exiting from its Ford dealership in Southend. Underlying pre-tax profits were up 28% and chairman Richard Allan said that had been achieved 'despite a generally unhelpful trading environment'. Dealership turnover was down 11% to £168 million, but pre-tax profits in the division reached £3.7 with the increase in profits attributed to the closure of under-performing businesses, coupled with the predicted improvement in performance from dealerships that were refranchised last year.

Record contract hire business in March and April contributed to a 15% year-on-year expansion in the company's contract hire fleet to about 3,000 vehicles on which the risk is carried.

Allan said: 'It is extremely difficult to predict the likely performance of the group's franchised dealerships in the second half. Both new and used car sales are currently below expectations due to consumer uncertainty over vehicle pricing. There is pent-up demand and once prices settle down, business should pick up sharply, but we may not see the benefit until 2001.'