Dealers heading into a spell of reduced profitability, says ASE

Time 12:18 pm, October 3, 2017

LOSSES during August at the average UK motor retailer worsened by £2,000 compared to the same month in 2016, reaching a deficit of almost £17,000.

As a result of the increased loss, the return-on-sales percentage dropped below one per cent for the first time since August 2012.

Thanks to increased turnover, average site profits stand £20,000 above the values earned five years ago, but it is still significant that the one per cent barrier has been broken, say profitability specialists ASE.

Used car return on investment increased again in August to just under 90 per cent, reflecting the continued strength of the used car sector.

This is particularly the case with older used cars which are currently performing strongly. ASE says retailers need to be wary of the increase in vehicle stock days, which have begun to creep up, putting dealers at risk if there is a downturn in residual values.

In its regular profitability statement, ASE added: ‘With new vehicle sales (and registration levels) set to be significantly behind the prior year in September, the level of bonus earnings will be pivotal for the overall performance for the year.

‘Many franchises reduced retailer target levels for the quarter and used car and aftersales profits remained strong, so overall performance is likely to not be as bad as the headlines would suggest. It does, however, appear that we are settling into a period of reduced retailer profitability.’

August’s figures bring the total 12-month rolling profit for a typical dealer to £182,000.

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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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