A recovery in UK car sales has in recent weeks helped boost the bombed-out share prices of Britain’s leading dealerships, such as Pendragon. This week, industry data suggested that September car sales had jumped 11.4 per cent year-on-year, as the impact of the government’s £2,000 “cash for bangers” scheme helped to revive demand. An extension to the
scheme should help Pendragon achieve sales advances after last year’s collapse in trade. The fivefold rise in Pendragon’s share price over the past year is hardly an advertisement for buying the stock now, as the group was forced to negotiate a punitive £530m debt refinancing in May. The fragility of car demand and residual debt, combined with finance payments, remain a risk. But with the harsh penalties of restructuring receding, opportunistic investors could still see some upside.