MOTOR dealership group Inchcape warned today that car sales will continue to fall in the UK this year as modest economic growth and higher unemployment weighs on the market.

The group, which sells new and used cars in 26 countries and employs around 14,300 people, said UK sales fell by 3.1% to �2.05billion during 2011.

Inchcape, whose UK dealerships include Cooper BMW and Mini in Ipswich, Colchester and Chelmsford, and Inchcape Volkswagen in Colchester and Chelmsford, said the climate in the UK and Europe would remain tough as austerity measures hit consumer confidence and spending power.

However, profits across the group, which also sells marques including Audi, Jaguar, Land Rover, Mercedes-Benz and Porsche in the UK, grew 6% to a better-than-expected �227.7milion, driven by its Asia-Pacific operations.

The decline in UK sales was not as severe as the wider market, Inchcape said, which saw a 4% drop in sales in 2011, due to the tough comparisons with 2010 when the Government scrappage scheme was still in place.

Inchcape, which has 117 retail outlets in the UK, was awarded two further franchises in the period, a Porsche dealership in Portsmouth and Volkswagen outlet in West London.

The company also runs a fleet management and leasing arm, which has 50,000 vehicles in the UK.

Inchcape said it expected new models, including new BMW 3 Series, Audi Q3, Volkswagen UP! and Beetle and Mercedes-Benz B Class to offer some support to sales this year.

Group sales dipped by 1% to �5.8billion in 2011 as the tsunami in Japan hit supplies to its Subaru distribution businesses in Australia and Toyota and Lexus operations in Europe and Asia.

Russia and emerging markets saw a 15.6% surge in sales to �1.2bn in the period, while Europe, not including the UK, saw a 7.5% drop.

James Dilks-Hopper, analyst at Numis Securities, said the group profit performance was “particularly impressive given the uncertain macro environment and the impact from the Japan earthquake”.