The government scrappage scheme and strong recovery in used car margins have contributed to the UK’s largest car dealership’s profitability last year, it has been reported.

Pendragon, the automotive group that owns Stratstone for luxury cars and Evans Halshaw, reported pre-tax profits of £10.1 million, according to the Press Association.

The company, the largest independent operator of motor retail franchises, suffered a loss of £33.6 million in 2008.

It is now facing the end of the scrappage scheme, which has been funded by the government to provide a short-term boost to new car sales.

The firm predicts new car sales for 2010 will be below the pre-recession average levels but that the market will begin to show signs of improvement.

Pendragon owns 276 franchises nationwide after being forced to shut down 26 of its outlets last year due to the economic downturn.

It has also identified another nine closures that may have to take place this year.

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