Operating profits at car importers and distributors Henry Ford and Son fell in 2005 despite a marked increase in turnover, according to its latest accounts. Colm Keenareports.

Operating profits fell to €1.5 million from €1.9 million. But a profit of €33.8 million from the sale of an 11.5-acre site in the Cork docks, among other lesser factors, brought pretax profits to €38.4 million.

The Cork-based Irish Ford subsidiary had a turnover of €377.7 million in 2005, an increase of more than 25 per cent on the €309 million turnover in 2004. However, its cost of sales jumped by more than 27 per cent to €378 million from €296 million.

Managing director Eddie Murphy said the 2005 results were very satisfactory in terms of profits and sales performance. "The mix of vehicles sold can lead to a loss of margin.

"The updated Ford Focus was launched at the end of 2004 and had its first full year last year. It was an outstanding sales success, but it's at the heartland of the market where the margins are tight."

He said the new car sector was under pressure from increased interest rates and the high level of used car sales from unregulated "roadside" operators. "There's a very vibrant black economy in used cars," he said.

"Roadside trading should be banned. I have nothing against the legitimate used car trade but the rest of us have to pay rates and VAT, etc."

Mr Murphy said he welcomed the fact that Minister for Finance Brian Cowen had announced in the Budget that there would be a consultation process before the introduction of measures to encourage people not to use high-emission vehicles such as SUVs.

"The industry doesn't have a problem with dealing with carbon emissions. We accept that the Irish taxation regime will have to do more for a green environment."

Mr Murphy said he suspected that owners of vehicles with high emission levels would be penalised from January 2008. How incentives for more environmentally friendly vehicles would affect the Ford brands was difficult to guess, he said.

The 2005 accounts showed the group's margin dropped to 2.8 per cent from 4.2 per cent a year earlier. Ford sold about 30,000 cars and commercial vehicles in 2006, he said, a similar number to 2005.