Marginal December loss rounds out tough year for UK motor retailers

Time 2:08 pm, February 11, 2020

THE average UK retailer lost £1,700 in December against a profit of £2,900 during the same month in 2018, according to the latest data from ASE Automotive Solutions.

Mike Jones, chairman of the dealer profitability specialist, said today: ‘Whilst not a huge financial swing, this movement shows the tough year retailers have had to endure in 2019, with lower new car volumes impacting bonus earnings.

‘2019 finished with overall return on sales down at 0.81 per cent – the lowest year-end position we have seen since 2011. Average retailer profitability also fell during the year, despite a number of late rescue packages, as brands sought to support their retail networks.’

There was some positive news, though, added Jones. ‘As new car retailing has become more challenging, retailers have increasingly focused on used cars to fill the profitability gap. After a couple of months of decline, we saw a rise in the key return-on-investment ratio during December as retailer profit [that was] generated increased.

‘Whilst still below the prior year ROI, this was a result of increased stock, as overall profit from used in the year rose.’

Looking ahead to what 2020 might bring, Jones said: ‘We have already seen a slight bounce to retail activity following on from the decisive election result.

‘This will hopefully continue as we move through 2020, albeit I am sure that the Brexit trade deal negotiations will produce a number of confidence-sapping scare headlines as we move through the year and closer to deadline day.’

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