CAR dealership Reg Vardy vowed to take its growth drive up another gear after posting a 19 per cent rise in pre-tax profits.

The Sunderland group said changes to European Union rules designed to open up the car market, which take effect in October, would spark a period of significant growth.

Sir Peter Vardy, chief executive, said: "We have again achieved record results for the group.

"The continued strength of our balance sheet gives us the opportunity to continue our growth strategy towards our goal of being a dominant motor retailer in the regions in which we operate."

The EU is changing the laws governing block exemption, which means approved franchises will not be shackled to buying parts direct from the manufacturer, but can source generic parts from other firms - and pass the savings onto the customer.

Sir Peter said: "The dawn of the new block exemption regulations in October will herald a new platform for our industry and a more secure environment for automotive retailers. In this environment, Reg Vardy will be at the forefront of retailer consolidation."

The company, which has 78 dealerships in England and Scotland, hopes to have 100 dealerships by April 2005, and has been realigning its portfolio ahead of the law changes.

It sold eight outlets in the first half of the financial year, but has taken on another 11 dealerships since February.

The sell-offs reduced annual turnover slightly, from £1.39bn to £1.33bn, but results for the year to April 30, published yesterday, show pre-tax profits continuing their upward march, to a record of £38.8m.

While the group will focus largely on strengthening its presence in the Midlands and the South, bosses said this would not prevent them buying more dealerships in their heartland of Tyne and Wear and Teesside.

Robert Forrester, finance director, said: "Our anticipation is that every region in which we operate will expand.

"It is more difficult in the North-East because we have already got a fair chunk of the market, but that does not mean we cannot expand."

The figures were welcomed by City analysts. Vinay Bedi, director of Tyneside stockbrokers Wise Speke, said: "Vardy's will profit from the expansion, which will pick up speed as the financial gains to be had in this sector begin to be seen in the autumn, backed by a share price rating that is still attractive."