Retailers were the only automotive stocks to hold steady in the first quarter, Automotive News Europe reported. The UK, the home market for most publicly held dealer groups, became Europe's largest and most resilient market in March.

UK sales rose 3.4% in March, compared with an overall rise of 2.4% in the 17 west European countries. With 438,000 passenger car registrations in the month, the UK total was well ahead of Germany's 318,000.

Pendragon topped the retail segment, with a 7.3% improvement in share price in the first quarter. The UK's largest retail network is buying back its shares with cash generated from the sale of redundant car showrooms and car parks. This will automatically boost earnings for remaining shares.

Pendragon posted sales of £1.88 billion (E2.63 billion) in 2002, up 21% from 2001. Earnings before interest and taxes were stable at £39.5 million. Pendragon is pursuing its expansion drive in the USA with the acquisition of two Land Rover dealerships in southern California for £8.6 million.

Inchcape, the world's largest independent automotive services company, improved 4% in the quarter. It was helped by buoyant Asian economies — before the outbreak of the severe acute respiratory syndrome (SARS) and particularly strong sales in Australia, Singapore and Brunei.

Sales in 2002 increased 6% to £3.5 billion, while operating profit
rose 13% to £116 million — beating analysts' expectations.

Inchcape is looking to buy individual dealerships to expand its luxury-brand portfolio with its cash surplus. Failing that, the company said it will return the cash to shareholders.

By contrast, investors in European Motors saw the value of their investment drop 20.4% in the quarter. The EU proposals to reform car sales and servicing, which sent European Motors' shares soaring on hopes of strong sales and profits a year ago, have waned, Automotive News Europe said.