UK CAR dealers recorded average losses of £18,000 in February 2018 – a £4,000 increase year-on-year.
The figures, which come from automotive profitability specialists ASE, show a continued trend of rising mid-quarter month losses, meaning the gains made in January have been reversed, leaving the average dealer £2,000 behind in terms of year-to-date profits.
The organisation attributes the downward trend to deterioration in new car profitability. The full bonus earnings won’t be revealed until the March results come out, but low new vehicles sales volumes have had a negative effect on profitability in February.
The used car market remains healthy, with strong levels of return on investment. Although dealers are, on average, running with higher levels of stock than they’d like, the pressure is being well managed and turnaround isn’t too low, says ASE. This means used cars are a lucrative profit stream in the face of a struggling new car market.
Despite key service ratios all deteriorating slightly over the past year, aftersales have continued to grow in profitability. Capacity is on the rise to keep up with the increasing vehicle parc, letting dealers step up their vehicle health check upselling.
The overall outlook for 2018 depends heavily on the first quarter’s performance. New vehicle registrations have been down, with the majority of the downturn happening at the end of March. ASE said it hoped this would mean lower self-registrations, with less of an impact on overall profit generation.
On WorkshopMagazine.co.uk: Glyn Hopkin halves servicing lead times with £420,000 aftersales workshop