Lookers says its links with Nissan will continue despite struggling sales forcing the group to close two of the manufacturer’s outlets in the North of England.

The decision came after the sites at Manchester and Macclesfield recorded a £400,000 loss in six months. The Manchester building, which also housed a Seat dealership now relocated alongside Lookers’ MG Rover showroom in Stockport, is being sold to Honda UK for £4.3m. This will allow Lookers to continue to use the property as its head office under a leaseback agreement.

Lookers chairman Fred Maguire says the group intends to retain its remaining six Nissan sites. He adds: “We still have a very strong relationship with Nissan. We have a very good business in Northern Ireland, and in the South-east, and we’re carrying on with these.”

According to chief executive Ken Surgenor, there are too many Nissan outlets in the Manchester area, with the result that they compete against each other.

However, he says, other franchises, including Vauxhall, VW, Honda and Land Rover, are performing well, helping Lookers achieve record interim results.

Turnover is up 12% to £576.4m in the six months to June 30, compared with £516.1m in 2003.

Underlying operating profits rose to £12.4m from £11.5m, while pre-tax profits climbed from £10.3m to £26.1m, boosted by a £16.8m VAT credit received in July from HM Customs and Excise.

“We’re talking to manufacturers about acquiring further business in those adjoining areas to our present market areas,” says Maguire. He is targeting small privately-owned franchises to “bolt on” to existing operations. The company is in advanced talks with one small group, and has another under consideration.

Lookers is also reviewing its used car operations. While the group will continue to sell used stock at its franchised outlets, it is also keen to develop dedicated multi-franchised used car sites. The current equal ratio of used to new sales could grow to three used cars for every one new sale.

That news will please City investors who are calling for higher profit margins from retail groups. One source says the company must also focus on its aftersales business.

The £31m acquisition last month of parts distributors FPS offers further opportunities for growth, with Lookers planning to increase its number of depots from 19 to 22 by the end of the year.