John Weir, the owner of Scotland's biggest Mercedes Benz dealership, is braced for a fall in sales this year as increased interest rates force high-spending consumers finally to consider deferring the purchase of luxuries.

After big spending fuelled by cheap credit helped Weir increase sales by 20% to a record (pounds) 96m last year, a rise in borrowing costs this summer could spell the end of a boom period for the high-end car business.

''Our main competitor is actually interest rates; if they stay relatively low people do not think twice about buying our sort of car. But if they increase we could find things slowing up this year,'' said Weir.

However, the former

accountant is not overly concerned about the outlook for earnings at the company, which has been investing in new facilities and extending its range to include more affordable Smart two-seater cars.

Accounts for John R Weir show that while turnover raced ahead in the year to end October operating profits fell 27% to (pounds) 1m, as a result of investment in facilities and services.

A first full year's contribut-ion from the former Dicksons of Perth business was offset by the costs of integrating the business. Weir supplemented its five Mercedes dealerships by adding a Jeep and Chrysler operation in Perth.

As well as investing in new facilities in Perth and Dundee, Weir spent heavily on training staff to support sales of Smart cars after winning the franchise for the marque from Daimler-Chrysler in 2002.

Sales of the innovative urban car are expected to increase, helped by the introduction of four-seater models.

Weir said that he had also invested in training and development programmes for management to take account of the fact the company had grown into a sizeable multi-site operation.

A big fall in the total emoluments he received, from (pounds) 750,000 to (pounds) 51,000, largely reflected the payment of a hefty one-off bonus to Weir to celebrate the company's 10th anniversary in the preceding year.

Weir said he also received around (pounds) 200,000 from Holmston Holdings, another com-pany he controls, which owns most of the properties used by the motor business.