Britain’s biggest car dealer today warned the Bank of England against a further interest rate hike as it reported a profits slide and cautioned that dozens of smaller rivals were already on the brink of bankruptcy.

Pendragon said it was clear that the five interest rate increases in the past year had made consumers far more cautious about the amount they are willing to spend.

Trevor Finn, chief executive, added that the car market may not begin to recover from its current slowdown until early next year.

Pre-tax profits across the group in the six months to June 30 fell to £33.5 million, 35 per cent below a year ago, in line with a warning two months ago.

Then Pendragon warned that margins for both new and second-hand cars were around £50 per unit lower following widespread discounting on the forecourt.

Revenue in the half-year was £77 million higher, at £2.7 billion.

Mr Finn said: “We feel interest rates have gone far enough, and you’re seeing similar comments across a broad spectrum of businesses. You’re even getting the likes of Tesco commenting on it now.”

He added: “I would say there are now dozens of dealers not making a commercial return.

“By that I mean they’d be better off having their money in a building society.”

Mr Finn revealed that Pendragon would look to snap up smaller dealers in bolt-on acquisitions, as it did last week when it bought Dixon Motors from the administrators, adding 19 dealerships to its estate.

In two previous market downturns Pendragon bought Stratstone, in 1990, and Evans Halshaw in 1999. The two are now its biggest brands.

“We have always done well in this kind of environment,” Mr Finn said. “There are lots of opportunities when smaller dealers come to the market.”

Shares in the group climbed 12 per cent, or 9p to 81.75p after the results as analysts breathed a sigh of relief the profits slide was not worse.

The interim dividend is up 38 per cent at 2p per share.

Traders added that short-sellers had been caught on the wrong foot and were closing their positions, adding the momentum behind the share price.

“We would expect the share price to increase this morning as its interim performance have exceeded expectations,” Panmure Gordon analyst Mike Allen said.

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