Inchcape, Britain's biggest car dealership, is preparing to offer back-up services to supermarkets planning to enter the new car market in the wake of a European commission shake-up of the current sales regime later this year.

But chief executive Peter Johnson said supermarkets were holding off from taking the plunge until they were sure what opportunities were offered by planned changes to the commission's block exemption system. "The supermarkets really want to understand exactly what is going to happen before they take their decisions."

But if supermarkets did decide to enter the new car market the EC's decision to break the existing link between retailing and after-sales service would present Inchcape's growing logistics operations with a clear opportunity.

"If supermarkets were to say they were interested in selling [new] cars and financing the sales but were not interested in after-sales, Inchcape would say 'fine, we will provide aftercare, like handling the part exchange, delivering the cars, that kind of service'," Mr Johnson said.

Over the past year Inchcape has built up its logistical operations to add to its car dealership network, buying the 51% of refurbishment group, Eurofleet; setting up a logistics joint venture AA Buycar, with the AA and launching AutoCascade, a remarketing joint venture with Avis Europe.

Overall group profits rose 32% to £97.9m - helped by a £12m fall in the group's interest charges, a £2.5m currency translation gain on operations in Hong Kong where results were boosted by a huge surge in taxi sales as tax changes prompted a switch from diesel to liquified petroleum gas vehicles.

Mr Johnson acknowledged that last year's results had been helped by one-off factors but said he was pleased with the overall performance. "It is not just the improvement in profit before tax and earnings - we have generated £200m in cash and made the right kind of strategic acquisitions."

The dividend is being increased by almost 23% to 27p a share.