Abercromby, the troubled Edinburgh-based group, has sold a VW outlet as the first step in a plan to reduce its size and return to profit.

##Cunningham(1)--left##Alaster Cunningham, chairman and owner of Abercromby, which has reported £1m losses for each of the past two financial years, said: “It is crucial for our long term future that we downsize because we were an in-between size. We were caught in no man's land.”

Two years ago, Cunningham was forced to inject another £1m of his own cash into a group which once turned over £155m. He is now committed to streamlining and other disposals are likely, though he denied his Audi outlets were for sale. The Eastern-Western Group has bought the VW dealership in Edinburgh's Leith area but the price paid has not been revealed.

Abercromby's VW site at Stirling is poised to become a dealer development operation led by former Sloan of Edinburgh executive George Rennie.

The future of Abercromby's three Audi dealerships has been the subject of mounting speculation, but Mr Cunningham said: “I can state categorically there is no deal for Audi.”

The latest sell-off comes months after Abercromby disposed of the three Volvo sites it operated on the West coast to its Edinburgh rival, the John Martin Group.

Although Cunningham publicly states there is “no deal on the table for Audi”, the manufacturer is keen to offload the burden from Abercromby and is actively looking for a buyer for its sites.