5:00 am, November 3, 2016
THE average UK motor retailer made a profit of £68,000 in September, slightly behind the profit made in September 2015 of £73,000.
Overall, this leaves retailers £14,000 down on profits for quarter three and £24,000 down on a rolling 12-month basis, according to the latest figures from profitability specialists ASE.
Despite the fall in profits, the return on sales percentage actually rose in the month as a result of a four per cent drop in monthly turnover, ASE said.
Mike Jones, ASE chairman, said: ‘We saw from the SMMT registration statistics that registrations were ahead for the month – however, this was bolstered with 25 per cent of the registrations taking place on effectively the last day.
‘Whilst this is a mixture of opportunity, changing of internal fleets and registrations to hit target, actual dealer new car sales were down in September 2016 compared to the prior year.
‘The key to future performance will clearly be in the profitable disposal of these vehicles as they enter the used car market.
‘Initial signs are positive with many dealers reporting record used car performance, both in volume and profit terms and residual values remaining largely strong. Stock levels are high, which is impinging on return on investment, however profit per unit remains healthy.
‘The decline in overhead absorption was stemmed in September and I will be watching to see whether this is the sign of a genuine sustainable turnaround in performance or a dead cat bounce.
‘As we move into the final quarter registration levels remain high, with the expectation that this will continue through the remainder of the year. Getting profits moving in the right direction is the challenge for all.’
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