Heavy losses at its used car supermarkets and margin pressure elsewhere held back car dealer Lookers last year, with the market both for new and used cars set to remain challenging.

In 2007, turnover rose by 17% to £1.68bn from £1.43bn with organic growth of 12%. Profit before tax for the year was £23m against £21.4m, an increase of 7%, but before amortisation and exceptional items profits fell to £24.5m from £26.4m.

Lookers said margin pressure on new and used margins reduced gross profit by 60 basis points to 12.3% from 12.9%, though it offset this by strict cost controls.

The Used Car Supermarkets operation posted a loss of £4.2m and Lookers has closed its Essex site and rationalised another two sites. It expects the business to return to profit in 2008.

Going forward, Lookers said that the market for new and used cars remains challenging, but in the March plate change month new cars delivered in the first few days of the month are ahead of last year on a like for like basis.

The franchised businesses are also performing to expectations, while the used car supermarkets are showing significant year on year improvement and the independent parts business is ahead of planned performance.

“This, combined with the full year contribution from the Dutton Forshaw businesses, gives us confidence that 2008 will represent another year of progress for the group,” chief executive Ken Surgenor added.

The total dividend for the year is 4.02p, an increase of 15%.