THE average UK motor retailer made a profit of £182 in January, a marginal but psychologically significant improvement over January 2015 where dealers produced an average loss of £59, according to ASE Automotive Solutions.
Although rolling 12-month profit advanced marginally as a result, the ASE witnessed a drop in the average return on sales from December because of a 3.6 per cent rise in turnover in the month.
While January volumes of new car sales are small in comparison to March, retailers saw a 2.3 per cent increase in sales, as compared to a 2.9 per cent increase in registrations.
The ASE said it will monitor the February numbers closely to see whether the increase in private registrations was matched by an increase in sales, or whether dealers are changing the way they self-register vehicles.
Meanwhile, used car sales were up more then four per cent compared to January 2015 with a three per cent increase in the average stand in value. However, stocks remain high – up 3.6 per cent in volume and seven per cent in value terms – which is driving down used car return on investment.
The ASE said: ‘January 2016 marked the first time when the average retailer had over £600,000 invested in used car stocks. We will continue to monitor stock levels as it is vital these are brought down over the coming months, particularly seeing as for some dealers total investment is understated as pre-registered vehicles and are held outside used car stock until they are made available for sale.
‘As we move through 2016 we expect to see rises in turnover every month and profits will have to grow significantly if we are to avoid further reductions in the net profit as a percentage of sales ratio.’
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