CAR dealership Pendragon said yesterday its £506m acquisition of North-East-based rival Reg Vardy had helped boost first-half profits, despite a slowdown in the new car market.

The group said pre-tax profits before exceptional items rose to £42.3m, from £36.8m a year ago.

And a spokeswoman for Pendragon said the Reg Vardy name would be kept for the foreseeable future, and a decision on whether to keep the name indefinitely would be made once the two businesses were fully integrated.

Pendragon paid £506m for Reg Vardy in February as part of an expansion plan, and said it had already contributed £19.9m in operating profit.

The company said: "Trading performance across the group has been good in the first six months of the year against a backdrop of a weaker UK new car market."

It added that impact of acquisitions boosted revenues by £856.3m, despite a 4.2 per cent fall in new car registrations across the UK market.

Pendragon currently operates 384 franchises across the UK, with dealerships also in Germany and USA.

Chief executive Trevor Finn said: "The first half of this year has been a very exciting time for Pendragon.

"The acquisition (of Reg Vardy) has made a significant contribution to the group's first-half results and its integration continues to progress well.

"The underlying performance of the group has been solid despite a falling UK car market. While we expect the UK car market to remain tough for the remainder of the year, we are confident of further progress with the group as we continue to grow the business and integrate Reg Vardy."

Last week, Pendragon was told by the Office of Fair Trading (OFT) it would not be asking the Competition Commission to consider its acquisition of Reg Vardy.

The OFT was looking at whether the buy-out would impact competitiveness in new car servicing across four areas of the country.

Pendragon also made an unsuccessful £258.8m bid in March for Manchester-based Lookers, which was dismissed as "inadequate" by the company.