Motor dealer Caffyns lost 10 per cent of its value after warning that its customers were not buying as many cars as before.

The group, based in Eastbourne, said a softer car market meant second-half profits would fall short of the £2 million banked for the six months to September 30.

It delivered its warning at the start of a key month for car sales in the UK, when vehicles sporting the new registration plates go on display in showrooms.

Compared with rival dealers which sell cars in bulk to firms managing vehicle fleets, Caffyns deals predominantly with individual buyers.

In a trading statement, Caffyns said: "There has been a reduction in demand in this market and this has been reflected in the company's performance."

Its troubles have been compounded by the disruption to sales from refurbishing a number of its dealerships, which are spread across Sussex, Kent, Hampshire and Surrey.

However, Caffyns said: "The company is well placed to benefit from such investment in the future, as well as from recent acquisitions which have improved the balance of our brand representation."

The group bought a Skoda dealership in Tunbridge Wells in November and a Volkswagen dealership covering Brighton and Hove in June.

Established in 1865, Caffyns is a family-controlled company with about 800 staff and more than 32 outlets and franchises selling new and used cars. It showcases 14 vehicle brands ranging from Audi and Chrysler to Rover and Skoda.

Shares fell 90p to 850p on Friday.

Monday March 7, 2005