A sharp rise in costs hit profits at Scottish car dealership group Peter Vardy in the year before it was forced to close two outlets.

Turnover in the 2022 calendar year rose to £590.5 million from £560.7m in the previous 12 months.

Bur rising interest rates, business rates, wages and utility bills added £4.6m to costs and accounted for an erosion of EBITDA to £11.9m from £15.7m in the previous year.

Pre-tax profit fell to £6.1m from £11m in the previous 12 months.

There was “outstanding” financial success in the new cars department but group profitability was “significantly impacted by a reduction in used car supply” which had affected the majority of the group’s retail outlets.

This was felt even harder during this calendar year, after consecutive monthly interest rate rises squeezed consumer spending and led to the company making cutbacks.

In a note with the newly-published accounts for the year to the end of December it said: “Post year end, on 31 August 2023, the group has made a strategic decision to close its large used car supermarket sites in Glasgow and Dundee and reduce the size of its head office operation due to a lack of used car supply expected in the next three to five years.

“This is part of our Fit for the Future strategy to ensure we are investing our cash and resources in profitable areas of the business.”

During the year the company secured a new three-year revolving credit facility for £25m, with an option to extend for two further years and a £10m accordion. This alongside used vehicle stocking facilities of £70m gave the group access to £105m of funding.