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The supply of new cars could start improving this year, according to management at national car dealer group Pendragon.

They expect the number of new vehicles on the market to start picking up in the coming months, after dealerships were hit by a shortage of vehicles during the pandemic – caused by lockdowns and a shortage of microchips – which left buyers facing long waiting times for new cars and higher second-hand car prices.

It comes as the group put out new figures showing a big drop in profits in 2022, though it added that opportunities in the coming months would more than offset rising inflation.

The Nottingham business – which takes in brands such as Evans Halshaw, Stratstone and CarStore – said: “We expect constraints in both new and used vehicle supply to continue into 2023, however, the new car order bank remains strong and there are some early signs that new car supply may be beginning to improve which we expect to drive growth in new car volumes during 2023.”

The group said it expects its underlying pre-tax profits for 2022 to be around £57 million, compared to £83 million a year earlier, which is slightly ahead of market expectations.

Performance during the last three months of the year, the business said, was slightly ahead of expectations, more than offsetting higher operating and interest cost pressures.

New car sales for the quarter were up 4.6 per cent on a year earlier, outperforming general market growth of 1 per cent. Used car sales grew by 5.2 per cent, following a year-on-year drop in the previous three months.

Back in December a £400 million bid to buy Pendragon collapsed when Sweden’s Hedin Mobility Group said it was no longer interested due to what it called the “challenging market conditions and uncertain economic outlook”. However it said it could still make a bid at a later date.