Dealers did not make large profits during the first quarter but the strong start to the year was important, said Keith Parry, head of motor retail for Barclays Commercial Bank.

“Most dealers we talk to were ahead of budget,” said Parry.

“We hear a lot about pressure on dealers, and this will be a tough year, but there is still an under-lying feeling of optimism.”

Parry said dealers could help themselves by increasing revenue and profit streams through higher volumes of used car sales and aftersales business.

“We know of dealers who are making this happen and offsetting in advance any downturn in sales later in 2008.”