Marginal October profit sees retailers drop back on 2018

Marginal October profit sees retailers drop back on 2018

THE average UK car retailer made a profit of £1,500 in October compared with a profit of £6,000 in 2018, according to ASE Automotive Solutions.

Mike Jones, chairman of the dealer profitability specialist, said today: ‘Whilst this may look disappointing, we should remember that the 2018 result was bolstered by the unwinding of some of the WLTP issues from that year. 2019’s performance looks more favourable when set against the result for 2017, which was an average loss of £1,400.

‘Used car stock remained at historically high levels during October. The growth in the used-to-new ratio shows retailers switching their focus to used cars and stock-turn days improved slightly in the month. This remains, however, an area of concern, with retailers needing to continue the current focus on improving stock-turn.

‘Over the past year, we have seen an increase in general overheads of three per cent. As we move into 2020, I expect to see a real war on costs taking place. The new car market is not forecast to improve, therefore retailers will need to manage cost increases to compensate, whilst continuing the focus on used cars and aftersales.’

He added: ‘At the end of October, overall retailer profitability for the previous 12 months had fallen nine per cent on the prior year, reflecting the challenges we have seen, particularly in the new car market. It now looks likely that overall profitability for the year will settle at this level for the year.’

MORE: Solid September result sees average UK car retailer slightly outperform 2018

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