Steady April result for retailers as profitability holds up despite volume drops

Steady April result for retailers as profitability holds up despite volume drops

THE average UK motor retailer made a profit of £5,000 in April – a marginal improvement over the prior year – according to the latest figures from ASE Global.

But in the current climate of significantly reduced fast-start tactical activity and reduced overall new car registration levels, this represents a good return and a base to build on through the remainder of the quarter, said the dealer profitability specialist.

ASE Global chairman Mike Jones said: ‘With new car volumes remaining under pressure as a result of the reduced general supply push of vehicles into the UK, used car profits continue to pick up the slack.

‘It was pleasing to see the used car return on investment bounce back from the dip below 80 per cent at the March month-end. While there remains significant scope for improvement, this ratio reflects the strength of used car performance.’

He added: ‘In the March results, I noted that the average retailer significantly increased their stock investment. While this is not unusual for March, with an influx of part-exchange vehicles and some tactical registrations, it was pleasing to see a reduction in April back to more normal levels. Margins remain under pressure as a result of availability challenges. However, overall results remain strong.

‘It looks like the pattern is set for the remainder of 2019, with new car registrations falling slightly compared to the prior year. Diesels will continue their decline and there seems nothing on the economic or political horizon which will lead to an increase in the brands’ desires to sell cars in the UK raising the supply-push.

‘The profitability focus will therefore remain on used cars and aftersales for retailers. As we saw in 2018, results can be improved, even in times of a declining new car market, and this is likely to be the case in 2019.’

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