Fears of further interest-rate rises look set to weigh on car sales in the coming months as consumers steer clear of big purchases, Britain’s largest motor dealer said yesterday.

Pendragon, which trades under the Evans Halshaw and Stratstone brands, gave warning that continuing uncertainty over whether borrowing costs would rise further would adversely affect sales of “big ticket items such as motor cars”. The group, issuing its third profits warning since last November, said that used car sales would be “subdued” as manufacturers force new cars on to the market using incentives.

The company said that its used car business would underperform expectations, with the slowdown in consumer spending set to continue into next year, knocking £20 million off this year’s operating profits and denting next year’s results by £10 million.

Sales of new and used cars are expected to be down 4 per cent this year. Shares in the dealer fell by 16p to 82p.

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