THE Reg Vardy Group is on course to become Europe's biggest car dealership after recording record half-year profits.

Strong growth in its agency sales helped the firm sell nearly 95,000 cars in the first six months. The latter half of the financial year is traditionally stronger for sales, fuelling expectation that Vardy will break the 200,000 barrier.

The group, which has added 20 dealerships so far this year, taking its total to 82, said low interest rates, low unemployment and consumers with high levels of disposable income had made it a bumper trading period.

Robert Forrester, finance director, said: "Each sector of the business has done very well.

"The consumer in the UK is proving cars are cheap, affordable and that they can change their cars every 24 months - that has driven high levels of demand.

"The UK car market will be a record this year. The used car market is very strong."

The group, based in Sunderland, said profits before tax and goodwill had risen 35.2 per cent to £24.6m on the back of an all-time sales high in the UK new vehicle market.

The used vehicle market and after-sales operations also saw strong growth.

Vardy said market weakness during the World Cup and Jubilee celebrations last year led to favourable comparisons with this year in the first half to October 31.

The group invested £34.6m in buying and developing outlets since February.

Vardy announced yesterday that it has been awarded Vauxhall franchises in Motherwell, East Kilbride and Falkirk.

The Trust Volkswagen brand is to expand early next year, with a new dealership at Redditch, in Worcestershire.

Mr Forrester said: "We need more of the same - profitable acquisitions. There is a job to be done in buying dealerships and making them as profitable as our car dealerships now. We have a passion to do it."

He said the industry was still waiting to see the full effects of block exemption laws introduced in October.

The change in the law will prevent manufacturers from exercising a veto over who can act as authorised dealers.

Vardy is looking at introducing separate multi-franchise after-sales operations in major cities to take advantage of the changes.

The company raised the interim dividend to shareholders by 20.9 per cent to 5.2p, from 4.3p last time.