3:50 am, February 23, 2012
THE average car dealer made a profit of £84,000 last year, according to the latest figures from ASE.
Although that figure is £35,000 down on 2010, it still marks a strong performance, according to the company, a provider of professional services to the motor trade.
The trend in overhead absorption remains very concerning, however. Absorption on average is now well below 60 per cent which puts massive pressure on used vehicle performance with the low current volume (and profitability) within new vehicle sales.
The overall average dealer result of a 0.8 per cent return for 2011 looks, on the face of it, to be a superb result given the current economic climate, says ASE.
The averages do, however, cover a significant split in performance. A small number of brands are currently producing exceptional results with all of their dealers making significant profits. Whilst there has been a slip in the return earned by the top 10 per cent from 4.8 per cent to 4.5 per cent compared with 2010, the top dealers in 2011 are significantly larger and are averaging £400,000 profit per site.
This contrasts massively with a number of predominantly volume (or used to be volume) brands where the average is hovering around break-even.
Given the increasing reliance on used vehicles for profitability it is disappointing that there has not been significant progress increasing return on used car investment.
Moving this upwards towards the benchmark has to be an area of focus for 2012, says ASE.
