An accelerating trend for motorists to buy luxury cars such as Jaguars and Land Rovers has propelled the marques' owner Tata Motors into profitability, as well as driving a 48% rise in first-half profits at car dealer Pendragon.
The news also provides a boost for economists scouring their gauges for positives readings, as the luxury car market tends to enter and emerge from recession earlier than other sectors.
Tata Motors said yesterday it had returned to profit in its first quarter thanks to increased sales of Jaguars and Land Rovers, booking a net profit for the three months to June of 19.9bn rupees (£273m), compared with a R3.3bn loss last year. Group revenues also shot up by 64% to 268.76 billion rupees, while sales of just Jaguar and Land Rover jumped by 81%.
Meanwhile Pendragon, Britain's largest motor dealer, reported a pre-tax profit of £15.7m on sales 15% higher at £1.83bn for the six months to June. The company, whose Stratstone dealerships sell premium models such as Aston Martin and Maserati as well as Jaguar and Land Rover, said the prestige sector was its best performer in the period with sales rising by 24%.
Trevor Finn, chief executive of the car dealer, said: "Most of our customers are small businesses, we don't have that many private buyers. A lot of small business people are feeling more confident about the future. Also these people are the first to defer their purchase. The recession had already taken a grip by June 2008 at Stratstone."
The company said the growing demand for high-end vehicles was likely to be mirrored by both new and used cars in its mass-market dealership, Evans Halshaw, which it expects to continue to grow in 2010. Shares in the company, which had fallen by almost a third since the end of April, gained 0.5p to 24p.
As the market recovers, Pendragon will also attempt to refinance its debt as its interest charges rose by 30% on the previous year.
Nick Bubb, an analyst at stockbrokers Arden Partners, said: "The interest charge of £24.4m is rather higher than a year ago and there were headwinds in the form of lower used car margins and a weaker after-sales market but that has been more than offset by the benefit from strong used car volumes and surprisingly good growth in the 'premium' segment of the market. There is the premium versus value argument here: John Lewis versus Argos. Customers of John Lewis are more confident at the moment than customers of Argos."
Tata Motors acquired Jaguar and Land Rover for $2.3bn (£1.46bn) from Ford in 2008, only for sales of the two brands to crash during the global economic downturn. However, the upturn for luxury cars worldwide, as well as a better performance in Tata's heavy-duty trucks in its home market of India, has compensated for an increase in the price of steel and other metals and helped lift the group's shares to an all-time high yesterday.