Caffyns, the South of England car dealer, has reported a 40% rise in pre-tax profits to £1.56m.

Its final results for the year to March 31 show turnover grew to £193.2m from £165m the prior year.

Underlying profit before tax, which excludes items with non-trading attributes due to size, nature or incidence, was up 78% to £2.16m from the prior year's £1.22m.

Simon Caffyn, Caffyns chief executive, said: "Caffyns enjoyed a successful year with sales, profits, earnings per share and dividends all increasing substantially.

"By adopting a strategy of trading from larger sites, and by focussing on our excellent franchises, we have been able to record an improved operational performance in both new and used cars.

"We look forward to taking further advantage of the growth opportunities presented by improved economic conditions in the UK."

Caffyns reported that new unit sales increased by 18.6% on a like for like basis. Used car unit sales were up 17.5% on a like for like basis. Used car margins improved and gross profits were also ahead of the company's expectations.

In aftersales, it has seen a slight increase in the overall size of the 0 to 5 year old car servicing market resulting in a 2.5% increase in like for like aftersales revenues.

Caffyns added: "The new car market continues to be driven by manufacturer offers which are positively impacting our retail sales. While Europe is showing signs of recovery, it is encouraging to see manufacturers continuing to support the UK market.

"Whilst we expect to experience continued growth in new car sales, we continue to place particular emphasis on increasing our levels of used car sales and customer retention for aftersales business."

At the beginning of April 2014 Caffyns relocated its Goring Volkswagen dealership to a new-built property in Worthing with a 15 car showroom and a 12 bay workshop. The cost of this £4.75m development will be partially offset by the sale of the Goring property.

The group is updating the showroom identity of its Skoda and Seat businesses in Tunbridge Wells, and has similar work under way at its Vauxhall dealership in Ashford, while at Eastbourne Audi it is expanding the used car display area and new car showroom.