The company, however, returned to profitability in July and August, helped by a strong performance since the easing of COVID-19 lockdowns, it said.

Pendragon, which operates the Evans Halshaw, Stratstone, Pinewood and Car Store brands, said it remained unable to provide a full-year outlook because of uncertainties once the government withdraws its industry support programmes.

"We've been encouraged by the first few months of trading after reopening and, while the outlook for the remainder of the year remains uncertain, we are confident the operational improvements we have made leave us well-positioned for the long term," Chief Executive Bill Berman said in a statement.

Berman this month laid out a new strategy for the company to transform automotive retail through digital innovation, with its cloud-based dealer management division at the heart of the strategy.

After rising as much as 3.3%, shares in the company were down 3.1% at 7.2 pence by 1053 GMT. Its share price has plunged more than 40% this year.

The global health crisis has compounded troubles for UK car dealers, which were already facing muted demand and pressured margins after Britain's decision to leave the European Union.

Pendragon said the pandemic would cost it 44.1 million pounds this year.

The company had already announced plans to cut 1,800 jobs and close 15 loss-making stores as it dealt with pandemic-induced disruptions. Rivals Inchcape and Lookers have also taken similar measures.

However, Berman remains upbeat and told Reuters there has been increased demand for used vehicles as customers avoid public transport in the face of the pandemic.

Pendragon posted an underlying pretax profit of 7 million pounds ($9 million) for July and August, compared with a loss of 12 million pounds in the same period last year. For the first half, its underlying pretax loss narrowed to 31 million pounds from 32.2 million pounds a year earlier.

($1 = 0.7774 pounds)

By Jasmine I S