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Scrappage scheme boosts Inchcape but says UK market won't recover until 2010

CAR dealer Inchcape reported a drop in sales for the first quarter yesterday, but said the government&rsquo;s scrappage scheme had made a promising start, helping the retailer.<br /><br />&ldquo;When the scrappage scheme was introduced, we saw an increase in traffic,&rdquo; chief executive Andre Lacroix said. <br /><br />But he warned that the car industry was significantly down on last year, and did not predict a recovery before 2010.<br /><br />Sales were down 23 per cent on a constant currency basis for the five months to May.<br /><br />Inchcape also cut its net debt to &pound;100m at the end of last month, from &pound;404m in March, after a &pound;234m rights issue and &ldquo;improved cash flow&rdquo;.<br /><br />The dealer said it continued to outperform the UK car industry with like-for-like sales down 21 per cent in a market which is down by 27.9 per cent, partly due to an improvement in the used-car market across the UK.<br /><br />The group, which employs more than 15,000 people and has operations in 26 countries including Australia, Hong Kong, Greece, and Russia, has responded to the industry slump by cutting 2,000 jobs and introducing a salary freeze.<br /><br />But despite better trading in the UK, and in Singapore, the firm said there was little sign of recovery across the group. Last month, Inchcape posted a 69 per cent drop in first-quarter pre-tax profit.