Britain’s biggest car dealership returned to profit last year, helped by the “cash for bangers” scheme and strong recovery in used car margins.

Pendragon, the owner of the Stratstone and Evans Halshaw brands, which operates branches in the Bradford area, posted underlying pre-tax profits of £10.1m in the 12 months to December 31, compared with a loss of £33.6m in 2008.

The firm, which is facing the imminent end of the Government’s scrappage programme, predicted the market for new sales would be well below the pre-recession average for the next 12 months before gradually improving.

Chief executive Trevor Finn said: “The group has successfully dealt with the most challenging market conditions experienced since the nineties.

“We acted swiftly to implement significant cost saving and debt reduction actions.”

Pendragon now operates 276 franchises after it closed 26 outlets last year, with the overall loss of 879 jobs across the business. The firm said it had identified a further nine closures for 2010.

“While we anticipate our market will remain difficult in 2010, we are well positioned to focus on the profit opportunities that will drive our core business forward,” he added.