The UK's largest motor retailer on Tuesday posted a pre-tax profit of £15.7m on sales 15 per cent higher at £1.83bn for the six months to June.
It said its operating margin jumped to 2.2 per cent from 1.9 per cent a year ago after actions taken to reduce its cost base.
Pendragon, whose Stratstone dealerships sell premium models such as Maserati and Mercedes-Benz, said the new car market had continued its recovery, with especially strong growth evident in the prestige sector.
The company, which also trades as Evans Halshaw and Chatfields, selling mass-market Fords and Vauxhalls, said it had seen a more moderate recovery in the volume sector.
"At this stage we see the rest of the year remaining in line with our expectations as we continue to build on the strong start to 2010," the company said in a statement.