Dealers claw back profit

Time 9 years ago

THE average motor retailer made a profit of £351 in November 2012, figures from auditors ASE reveal. 

While the amount is relatively small, it still compares favourably with the figures from the previous November – showing an average loss of nearly £5,000 – and demonstrates the ‘continuing trend’ for dealers to break their previous year results in 2012.

Retail sites now show a rolling 12 month profit of over £138,000 on average, producing a  1.1 per cent or more return on sales – representing a gain of £50,000 compared to the same figure at the end of November 2011.

ASE puts this down to greater volumes of new vehicle sales, with sites on average selling an extra 60 cars compared to the year before. They do say that there’s ‘still room for improvement’ though – with some ‘top performing dealers’ consistently beating their benchmarks for ‘sales expenses as a percentage of gross ratio’.

It’s not just new cars that helped the results, though – used sales also improved, with the average return on investment for pre-owned vehicles hitting over 85 per cent. In fact, it could be an even more profitable operation, says ASE, if a shortage of quality stock wasn’t hampering supply.

Overhead absorption also held up ‘more resiliently than expected’. Dealerships managed to grow their service and parts profits slightly, so even though overheads did increase, there was something to help stem the ‘downward slide’.

So what of the next month in the chain – December? ASE predicts results to be strong, with the firm suggesting that strong sales will help see the national average rise to 1.3 per cent for 2012.

Jon Reay's avatar

Staff Writer Jon is one of the Car Dealer team's newest members. You can also find him contributing to AOL Cars.

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