Lookers has reported a strong start to the year and told the stock market its half-year financial results will be in line with expectations.

It said its motor division, which has car dealerships branded Lookers, Charles Hurst and Taggarts, made an “excellent start” to 2012 with Q1 trading ahead of budget and the prior year.

New car retail sales increased 6%, in line with the national market, while its fleet sales were slightly ahead of the total market. Margins were maintained at a similar level to last year.

“Whilst economic conditions continue to restrict recovery in the new car market generally, we are encouraged by the group's positive start to the year,” the AM100 company, headed by chief executive Peter Jones, said.

Used car volumes rose 11% in the quarter, with margins also improving.

Aftersales revenue was slightly ahead of the prior year, with margins held at a similar level to last year, as the group continues to improve its share of the market, assisted by investment in technology and procedures to improve customer retention and average sales value per customer visit.

In its aftermarket parts division, turnover was slightly below last year, although gross margins were maintained and costs kept below budget.

Net debt is well below budget and the level of Q1, with £5m raised from the sale of surplus assets and net cashflow ahead of budget.

Lookers added: “The new and used car markets continue to be affected by uncertain economic conditions. However, the aftersales bias to the business and the strong performance over the last three years, demonstrates the ability of the group to perform well in challenging markets.

“We are therefore confident that the group is in a good position to deliver a strong first half year performance and make further progress in the year, as well as being exceptionally well placed to benefit from medium term market recovery.”