European Motor Holdings chief executive Richard Palmer, buoyed by a falling threat from unofficial importers, plans to buy more prestige dealerships.

UK price cuts and the tightening of supply from mainland Europe had reduced the threat from those operators. Price differentials were down to 4% to 5%.

"The unofficial importers have been trying to fight back," he said. "But when a buyer is faced with a high deposit, long wait and a right hand drive surcharge the deals don't look so attractive."

EMH, with large Mercedes dealerships in London and a heavy bias towards prestige cars, was one of the first groups to be hit by imports Tight stock control and reduced costs saw profits for the six months to August up 16% from £4.2m to £4.9m. Turnover was down 7% to £202m.

Mr Palmer said the second half looked "extremely promising" as customer confidence returned. The group has bank facilities available to expand if the right opportunities arose.

The company is expanding its Perodua range with the launch of the new Kenari saloon at the Birmingham motor show.