New car registrations have fallen since April, the longest run of declines since 2011, in Europe's second biggest car market and are down 2 percent year to date, according to industry data.

Uncertainty over the Brexit vote, a June snap election that gave no party a majority and government plans to crack down on petrol and diesel models have all hit a market which hit record highs in 2015 and 2016.

Lookers, which posted an 18 percent rise in first-half adjusted pre-tax profits from continuing operations to 50.2 million pounds on Wednesday, had previously said it expected 2017 demand to match last year's 2.69 million sales.

"We didn't see all the political rumblings and the indecisive election coming and there's no doubt that that's had its effect on the fringes of the market in terms of confidence," Chief Executive Andy Bruce told Reuters.

"We think in the full year the market will be down about 3 percent... It's definitely taken the froth off the market," he said.

Lookers, which will increase its interim dividend by 10 percent, said it had benefited from dropping a number of lower-performing car brands and focussing on a smaller portfolio of vehicles. It expects to meet full-year expectations.

Bruce, who has been one of the most buoyant chief executives in previous months about the resilience of the market, also warned that demand in 2018 would depend on how the government handles Brexit.

"I sense that it might be about flat but a lot will depend on how Brexit plays out and the macro picture and the media commentary around it," he said.

(Reporting by Costas Pitas, editing by James Davey and Adrian Croft)

By Costas Pitas