Return on sales for the average UK car dealer rose in April new figures suggest, while overall turnover fell – the first signs the agency sales model is growing, industry expert have said.
The latest dealer profitability data from ASE shows motor traders are performing strongly in the wake of lockdown easing measures.
ASE reports return on sales rose to 1.35 per cent on a rolling 12-month average in April, thanks to strong profits and decreased turnover.
Dealers reaped high profits from used cars during the month while at the same time mitigated costs through the use of furlough, rates savings and removal of discretionary spending, said the firm.
Used car return on investment rose to 89.6 per cent, reported ASE, driven by an increase in average profit per unit with stock turn lengthening to 63.6 days as stock shortages impacted vehicle supply.
However, ASE’s data also shows that overall turnover levels were down 10 per cent in April on a rolling 12-month basis.
ASE said that while this drop was the effect of lockdowns, it also shows agency sales models taking an effect.
ASE reported: ‘This is manly down to the Covid lockdowns, however also shows the early signs of the growth of the agency model.
‘The fact that retailer profitability has grown during this period of reduced sales shows a potential path to retailer profitability in the agency future.’
ASE also said that due to dealer finance departments on furlough and a lack of reliable data not available until the end of June, it won’t be publishing comparative finance data until the end of this month.