Average retailer profitability down in November, according to ASE

Time 1:39 pm, January 11, 2016

NOVEMBER is notorious for being a tough month for the UK motor retail performance and this was truer than ever in 2015, with the average retailer losing £10,800 that month.

However, it’s the key performance in December, when annual bonuses for all franchises kick in, that determines whether all of the registrations in 2015 have fed through to improve dealer profit.

According to ASE, new car sales in November were down by one per cent on 2014’s figures. Overall new car sales for the 11 months to November were marginally behind the total for the previous year, in comparison to November’s 6.2 per cent rise in registrations. Meanwhile, used car sales have continued to grow on the back of self-registration activity, with the used-to-new car ratio creeping towards parity. However, ASE has noticed a concerning continued decline in used car return on investment on the back of increased stock levels.

Used car gross margins fell below 10 per cent in November for the first time since the financial crisis as a result of a combination of lower gross profit and increased average stand in values.

The financial result for December will be pivotal to overall dealer performance for 2015. The lack of working days is usually offset by the recognition of annual bonuses to produce a profit of more than £25,000 per dealer. However, with some franchises recognising a portion of annual bonuses throughout the year, 2015 may struggle to match 2014, in spite of the 6.3 per cent year-on-year increase in registrations.

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