Inchcape, the FTSE 250 car dealer, said today that weakening demand for vehicles in the UK will wipe out profit growth this year.

Shares in the company, which sells and distributes cars for manufacturers including BMW, Mercedes-Benz, Honda and Toyota, fell by 13 per cent to 257.5p after the news.

Inchcape reported that pre-tax profit rose 8.6 per cent to £130.3 million in the first six months of 2008, boosted by stronger-than-expected growth in Hong Kong.

The group gave warning that demand in the UK, which accounts for 21 per cent of total profit, had slowed sharply since May as consumers are reluctant to commit to big purchases such as cars at present and was likely to remain subdued.

André Lacroix, chief executive at Inchcape, said: “We expect the UK market to remain soft for the next six months and probably into the new year.

“Having said that, the rest of the group is pretty much delivering according to our expectations and, in some cases, it’s a bit better.”

British rivals Pendragon and Lookers have both recently warned of a possible slowdown.

Inchcape, which operates in Australia, Belgium, Greece, Hong Kong, Singapore and the UK, said its 2008 results were likely to be “broadly in line” with 2007, when it made a pre-tax profit of £235.1 million.

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