MG Rover’s collapse has been singled out as the main cause of a fall in profits for dealer group Caffyns.

While turnover increased from £80.1m 81.5m but operating profit reduced from £1,795,000 to £1,188,000 in the first half of the financial year.

Brian Carte, Caffyns' chairman, said: "In the six months to September 30, the affect on our business of the failure of MG Rover became apparent. We have nearly completed the process of managing the business away from MG Rover, a process that commenced prior to its fall into administration. Inevitably, the reorganisation has led to some disruption, with an influence on sales at the branches concerned. Trading at these branches should gradually improve once this reorganisation has been finally concluded."

Carte said management actions over the period included the successful trading out of Caffyns' MG Rover vehicle stocks, and the full refurbishment and refranchising of the dealerships in Tunbridge Wells, Brighton and Eastbourne. The dealerships in Tonbridge, Worthing and Uckfield have also been refranchised and are scheduled to be refurbished over the coming months.

The Lewes dealership has been amalgamated with the neighbouring Land Rover business and the sites in Seaford and Ramsgate have been sold, subject to contract. The costs of the refranchising of these dealerships impacted on the results in the first half of the year whilst the benefits will be seen in future financial periods.

"Whilst it is disappointing to report a fall in operating profit before tax and exceptionals, it is encouraging to see that we have made substantial progress on our refranchising and refurbishment programme. The retail economy is tough, as reported by many others in the market, and the outlook remains challenging. We have restructured the business and, when the final redevelopment work is complete, we believe we shall be in a considerably stronger position," Carte concluded.