Future is looking rosy for car deals.

BRITAIN'S biggest car dealership shrugged off fears over the future of the UK's cash for bangers scheme yesterday as it predicted annual results ahead of plan and for trends to keep improving.

Pendragon, the owner of the Stratstone and Evans Halshaw brands, reported higher sales of both new and used cars in the four months to October 31, thanks in part to the scrappage scheme helping to drive customers to the forecourt.

There have been calls for an extension of the scheme - currently set to finish by the end of March 2010 or until state funding runs out - to avoid pulling the rug from under a tentative car market recovery.

But the Nottingham company, which bought North East dealers Reg Vardy for pounds 500m in 2006, said trading so far in 2009 had been better than it expected at the start of the year and forecast further improvements in 2010.

While the scrappage scheme - offering motorists pounds 2,000 off a new car when they scrap a vehicle more than 10 years old - has helped increase sales in some areas, Pendragon said self-help measures were also bearing fruit.

Cost savings that have seen more than 60 dealerships close and 3,000 jobs lost have helped boost profits, according to the group.

It is also taking steps to bolster demand for after-sales services, which had been hurt badly by the crash in the car market.

"We are confident that this year's results will be in line with our current expectations and ahead of our original plan for the year," said the group.

"We intend to continue to grow used car sales and capture more after-sales business.

"We see many positive trends in our new car sales business and we expect to continue to see profit improvement next year from this part of the business."

It is also hopeful of a potential customer rush to buy ahead of the planned new year reversal of the temporary VAT cut.

Sales across its Evans Halshaw dealerships rose by 3% in the four months to October 31.

Its Stratstone premium brand saw new car sales rise 5.2% and profits well ahead of last year, despite benefiting very little from the scrappage scheme as it was instead lifted by cost-cutting and weaker comparatives.

Used car sales outperformed falls in the wider industry, ahead by 2.9% in the four-month period.

And its after-sales market notched up a 4% increase in profits thanks again to moves to slash costs.