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Dramatic turnaround in Vauxhall profits: Reilly

Vauxhall boss Nick Reilly has predicted "a dramatic turnaround in the profitability" of the marque's UK dealership network this year following the struggles of 2000. But a return to the black for the manufacturing side remains unlikely. And Mr Reilly, who is overseeing the complete restructuring of Vauxhall's manufacturing sites in Luton and Ellesmere Port, has shot down the hype which has caused many analysts to predict a record year for new car sales.

"It just isn't going to happen," he said. "I think it's very difficult to read at the moment because everyone is believing there is a huge amount of pent-up demand out there just waiting to break through.

"Yes we've all had a good first quarter, but from here on in I believe the market will settle down and I would expect it to remain pretty static for the rest of the year. If we have a market in total for the year which is similar or just a little bit up on last year then that would be pretty good."

And he acknowledges the growth in demand is producing profits for his dealers.

"There has been quite a dramatic turnaround in profitability and it's particularly in the retailer/dealership end of the business," Mr Reilly continued.

"Last year was particularly difficult for the dealers and for manufacturers and margins were cut in order to get customers into the dealerships.

"Our dealers were losing quite significantly on used cars coming back where they had negative equity. That is largely worked its way through and I think dealerships have been generally good at achieving cost reductions.

"So far this year, certainly for Vauxhall, the financial figures have improved very substantially on last year. Our dealership profitability has definitely improved over the past year and I see no reason why the trend should not continue.

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