PENDRAGON, the UK's largest car dealership group, saw its shares jump 22p to 393p after telling the City that profits for the full year were likely to be ahead of market hopes.

There had been concerns that the short-term outlook for new car demand would be adversely affected by consumer uncertainty.

But Pendragon pledged in February that it would continue its focus on the luxury end of the market, despite fears that consumer spending may falter.

In April, the company told shareholders that operating profits for the first quarter were ahead of the previous year and its expectations.

In a statement yesterday, Pendragon said it had seen further strong trading in its core UK business, with an improved performance by its Ford dealerships.

As a result, trading is likely to be ahead of current market expectations for the year to December 31.

Before yesterday, City analysts forecast underlying profits of about £30.7m, compared with £30.2m last year. Housebroker Arden Partners increased its full year estimates for this year to £33.5m following the statement.

Pendragon focuses on specialist and luxury cars, including Aston Martin, BMW, Jaguar, Land Rover, Mercedes, Porsche, MG Rover and Volvo. It also operates Ford and Vauxhall dealerships. The Nottingham firm has grown through acquisitions, and now operates 132 franchises in the UK, with a national network of dealerships.

Last year, the UK market for new and used cars was sustained by robust consumer confidence and the low cost of finance.

Pendragon has also established a foothold in California, as it seeks to enter the wider US market. Last year, it had four sales outlets and two servicing centres in the US.

Further acquisitions remain likely after the group negotiated a borrowing facility last year.

Pendragon will be looking to push its way into a strong position ahead of September's introduction of new block exemption laws that will prevent manufacturers from exercising a veto over who can act as authorised dealers.