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Changes in online-showroom relationship being accelerated by further lockdowns

Dealers told to 'hold firm' on pricing as used car prices rose by eight per cent in December 2020

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Average car dealer made £8,000 loss in November 2020, new data shows

James Batchelor by James Batchelor
January 14, 2021
in News
0

The average UK car dealer made an £8,000 loss in November 2020, latest figures show.

Data published by ASE Global today (Jan 11) reveals the average dealer made the loss after making a £53,000 profit in October.

But the results are stronger than November 2019’s which recorded an £11,000 loss, and also go to show how vital the furlough scheme has been to dealers.

ASE Global chairman Mike Jones said: ‘Despite being locked down across the UK for the majority of November, retailers still managed to maintain some of the momentum from earlier months.

‘November is always a loss-making month, however retailers were able to cut their losses to just under £8,000, down from over £11,000 in the prior year.’

While losses were reduced in November 2020, the impact of Covid-19 can been seen in the average retailer turnover, said the firm.

It fell by 19 per cent on the prior year and the fact that dealers were able to contain costs to minimise losses ‘shows the extend to which the furlough scheme has been vital to dealer profitability in 2020’, Jones said.

He added: ‘The reduction in losses and the fall in overall turnover has produced a rise in the rolling 12
month return on sales to 0.95 per cent. This represents the highest level this ratio has been since Q2 2019.

‘Whilst overall retailer profitability has fallen, the drop-off in turnover has been most severe in low margin activities producing this growth in return on sales.’

The November loss means there’s an uncertain outlook for the year-end, warned Jones.

‘As we progressed through Q3 and into the start of Q4 it looked like retailers were on track to match their 2019 profitability, despite the Covid crisis,’ he said.

‘With the emergence of the second wave and the associated national lockdowns, this is now unachievable, albeit retailers will achieve the considerable feat of staying profitable despite the pandemic.’

Jones recently appeared on Car Dealer Live talking about 2020 new car resignations and dealer profitability. You can watch the broadcast at the top of this story

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