Car dealer Caffyns has seen a big drop in underlying profit before tax as it continues to tackle sector-wide challenges including a dip in new car sales.

In financial figures released this week, it confirmed like-for-like new car sales were down 9.2% and used car sales were flat against 2017.

However, revenues rose 0.5% to £213.7million.

The firm runs a Seat and Skoda dealership in Tunbridge Wells and Vauxhall and Skoda in Ashford, along with a Caffyns Motorstore used car operation, in addition to outlets across Sussex.

The company described the market as "challenging" as it revealed underlying profit before tax had dropped more than 33% from £2.1m in 2017 to £1.4m at the end of the financial year, March 31.

CEO Simon Caffyn said: "We closed the year with a strong performance in the registration-plate change month of March and entered the current financial year with a stronger forward-order book than in the previous year, which is a source of encouragement, although we remain cautious about the outlook for the current year and recognise our dependence on the key trading months of September and March."

The firm cited three key challenges:

A decline in the new car market which slipped 11% for new car registrations and saw diesels sales plunge 26%;

Rates of vehicle excise duty were increased at the start of the financial year which it believes caused some customers to accelerate the timing of their purchases from April 2017 into March 2017. While this helped last year's financial figures, it meant a slow start to the most recent set;

And finally, the government's re-rating of commercial properties was implemented in April 2017 which resulted in an increase in the company's cost of business property rates in the current financial year of £0.25m.

It said the Tunbridge Wells Seat and Skoda businesses both continued "to deliver healthy levels of profitability" and the Skoda business in Ashford "performed well".

However, the Vauxhall dealership in Ashford "experienced very difficult trading conditions in the year with customers' confidence in the brand nationally at a low level".

In addition, it said Caffyns Motorstore, its used car business in Ashford, "continued to expand rapidly with further significant increases achieved in sales volumes and in levels of profitability".