A car dealership considering a bid for Reg Vardy said it was unlikely to reveal its next move until after Christmas.

Lookers reported good progress in arranging finance for a potential offer, which has to beat the £450m already been offered by Pendragon - the largest of the three companies involved.

It said it expected to update the market early in the new year.

Lookers has 93 dealerships and would double in size if it outbid Pendragon, which is the UK's largest car dealer after the acquisition of CD Bramall for £230m in 2003 left it with about 230 sites.

Lookers, which is based in Manchester, told its shareholders that a tie-up with Reg Vardy, which is based in Sunderland, would work well.

It said: "The directors believe that the combination of Vardy and Lookers would represent a compelling strategic fit, based on a shared culture and approach and complementary geographic and manufacturer fit."

A takeover would mean a windfall for chief executive Sir Peter Vardy and his family, who own 27 per cent of the company.

One hurdle for Lookers, which is believed to be preparing an offer of up to 850p a share, could be Pendragon's option to buy 16.6 per cent of the shares, owned by Sir Peter Vardy, at 800p.