HR Owen has sold its Volkswagen car and van business to Citygate Automotive for £2.5 million in cash.

The sale of five VW car franchises and one van franchise is still conditional upon the assignment of leases.

Citygate Automotive is a part of HR Owen, headed by Jonathan Smith, HR Owen’s Volkswagen divisional director.

Nicholas Lancaster, HR Owen chief executive, said: “This disposal is the second in a series of disposals which will focus HR Owen on its more profitable specialist business. The board is confident of the prospects for the specialist business going forward.”

He added at the time of HR Owen’s interim results in September 2005, market conditions had continued to be ‘extremely challenging with margins remaining weak’. These conditions continued to get worse for HR Owen which suffered in the volume and premium sectors. The group said its losses at the operating level will be ‘higher than expected’ for the second half of the year due to this.

Early this month, HR Owen sold its Jaguar, Land Rover and Volvo franchises to Lookers.