Strong performances by its Start City dealership and new Staffordshire car supermarket helped car retailer Lookers chalk up record first half sales and profits.

The company, with three outlets in Birmingham, overcame a depressed new car market to increase sales by 12 per cent to £648.1 million.

Underlying profits profits rose by 21 per cent to £ 11.1 million in the six months to June 30.

Its results were helped by a massive increase in used car sales, which rose by 25 per cent following the acquisitions of two supermarkets - Ian Shipton Cars in Burton on Trent and the Bristol Trade Centre.

Even on a like-for-like basis, the number of used cars sold rose by 4.7 per cent, helping the group overcome a fall in new car sales of 3.5 per cent. This figure came in a generally depressed market where the total number of car registrations fell by 5.8 per cent.

Lookers, which is based in Manchester, operate more than 80 franchised outlets and 36 vehicle servicing and parts sales facilities across the UK.

Chief executive Ken Surgenor said: "Lookers has performed well in the first six months of the year, achieving record profit and revenue growth.

"Our aftersales and used car operations have continued to exceed expectations and more than compensated for the decline in new retail sales."

Lookers said it had invested more than £21 million on acquisitions and over £8 million on additional franchise facilities in the first half.

Mr Surgenor said the Burton and Bristol centres had been integrated quickly and should add £85 million to turnover on an annualised basis.

Ian Shipton Cars, which operates on a five-acre site, sells about 7,000 cars a year and had performed ahead of expectations, he added, while there was scope for expansion with a further two and half acres available at the site.

The company forecast the continuing of tough conditions in the new car market, which is estimated to be 4.6 per cent at 2.45 million vehicles.

Mr Surgenor said: "Sales at our Vauxhall Brand Centre on Star Park, Star City, opened in June 2004, improved steadily over the course of the last 12 months.

"We would expect the sales and aftersales momentum to continue as the brand centre establishes itself as the leading retail offering in the area."

He added that trading in since the end of June had been in line with expectations with a slight improvement in new car sales, supported by strong fleet sales.

Order intake for September, a crucial month for car retailers with the launch of the new 55 plate, were "encouraging".

The company was looking to the recent cut in interest rates to stimulate further demand, while it was still searching for further acquisitions.

Lookers proposed a dividend of 4.75p, compared with 4p last year.