UK car dealer group Lookers has said crucial March trading, when new licence plates come into effect, was encouraging as the company posted an 89% rise in pre-tax profit to £26 million.

The profit was boosted by a VAT credit - before exceptional itens it rose 17% to £15.3 million, the Daily Telegraph reported.

According to the newspaper, the company said its focus on after-sales service and used cars had helped insulate it from slowing new car sales.

CEO Ken Surgenor told the Daily Telegraph he still expected 2005 would produce healthy sales and added that the company was keen to buy smaller dealers.