CAR dealers performed strongly in March, before many reported the market ‘going quiet’ in April, according to the latest report from professional services provider ASE.
The average operator fell slightly behind 2011’s ‘net profit as a percentage of sales’ ratio (1.7 per cent as opposed to 1.8 per cent) in the first three months of 2012.
But this is simply because more cars were actually sold.
The number of sales per salesman in March was up from 162 in January-March 2011 to 194 for the first three months of 2012. Profitability generated remained slightly ahead of 2011.
ASE said: ‘With March being so important to the annual result we get the first real picture on how 2012 will unfold. Vehicle sales performance is encouraging. Both new and used vehicle sales are up.
‘In fact the growth over 2011 is greater than the official statistics, reflecting the continuing decrease in representation points as the industry rationalisation progresses. Profits per unit are consistent, with used grosses in particular holding up well in the current climate.
‘Used vehicle return on investment has taken its seasonal drop to reflect the increased level of stockholding at the end of March.
Maintaining the momentum
‘The performance in aftersales has continued to drop backwards. Traditionally the overhead absorption at the end of March is as good as it gets for the entire year. We therefore expect overhead absorption to drop to circa 55 per cent as we move through the year.’
‘Maintaining the momentum in vehicle sales is clearly, therefore, going to be vital.’
In spite of the positive registration data, many dealers reported it ‘going quiet’ in April, says ASE.
‘Maintaining the improvement in productivity (and the relationship between costs and gross profit) in sales is going to be vital as Q2 progresses,’ concludes the organisation.