A steady start for dealers

Time 4:22 am, March 22, 2012

CAR dealership finances got off to a steady start in January, according to the latest figures from ASE.

Net profit as a percentage of sales stood at 0.2 per cent, which although ahead of the figure of 0.1 per cent for the same month in 2011 is still quite a way off the benchmark of 3.0 per cent.

The analysis from ASE says: ‘Most dealers have braced themselves for the current market environment being the new norm and the most pro-active have set about producing a strong financial result for 2012.

The relative mildness of the winter has helped all (except maybe those who stocked up on 4x4s hoping to make a killing) and January proved to be a relatively strong.

‘On the face of it the result in January was as expected. The profit performance was double the prior year, however, given the size of the result it is not a cause for celebration.

‘They key driver in the improvement was the average dealer producing a slightly better vehicle sales performance which has fed straight through to the bottom line. The continual driving down of the “vehicle sales expenses as a percentage of gross” ratio has to be a key focus area for 2012 and will be the route to profitability for most dealers.’

ASE adds that used vehicle sales are coming under increasing scrutiny and there is also concern over the performance of aftersales departments.

Dave Brown's avatar

Dave, production editor on Car Dealer Magazine, is a journalist with more than 30 years' experience in the worlds of newspapers, magazines and public relations.

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