An analysis of the financial performance of 38 key players in the in the new car industry has uncovered a culture of stagnant sales and falling profits.

The Business Ratio report, entitled 'The new car industry', revealed that the average pre-tax profit margin was a 'paper-thin' 0.8% in 1999/0, having fallen from 1.8% in 1997/98. The average profit per pound of payhas more than halved in the period under review, from 34 pence to 15 pence.

The report says: “Marginal sales growth of 3% between 1997/98 and 1998/99 was followed by a contraction in sales between 1998/99 and 1999/00, leading to a compound sales growth of just 1%.

“Compound profit growth stood at –31%. Good growth of 34% between the first and second years of analysis was cancelled out by negative growth of 65% between the second and third years.

{*Profitability and Sales*}