The AJ Blacker car dealership in Kingsteignton Road, Newton Abbot, is to close at the end of October.

Director Tim Morris said the business, which supplies new Peugeots, services Renaults and has used cars for sale, was unable to justify the 'substantial investment' the buildings required.

The site, once home to Devon Leathercraft, was given a partial makeover last year and the branding changed from Renault to Peugeot corporate colours, although a tall illuminated 'totem' sign featuring the latter manufacturer's logo was never installed even though planning permission was granted.

A source, who asked not to be named, said it was understood 22 jobs would be lost and the site sold for development.

Mr Morris would not comment saying only that the decision to close had been taken 'with regret'.

The firm's Renault servicing facilities will be transferred to its Torquay premises.

AJ Blackers has traded from the Newton Abbot site for approximately 30 years. The news it is to pull out comes just after the Society of Motor Manufacturers and Traders (SMMT) announced car sales were on the up.

It said UK registrations rose 7.9 per cent in May to 162,288 units, the largest percentage rise for 23 months and boosted by a 14.3 per cent growth in private demand.

But neither Peugeot nor Renault feature in Britain's 2012 top ten sellers which are, so far, the Corsa, Fiesta, Focus, Golf, Astra, BMW 3-Series, Polo, Qashqai, Insignia and FIAT 500.

Town development manager Sally Henley said: 'I was sad to hear Newton Abbot may be losing the AJ Blackler brand from the town centre and I do hope that this will not involve loss of employment and that staff can be re-deployed in the locality .

'I guess that the motor trade has been experiencing the same sort of challenges as high streets and when a building starts to need very significant investment it makes sense to look at the locations viability.

'However, in view of the shortage of employment land in Newton Abbot this could well become a valuable future investment site.'