Motor retailers ‘lost £400 on average in December’

Time 11:09 am, February 7, 2018

THE average UK motor retailer made a loss of £400 in December – in stark contrast to a profit of £17,000 for the same month in 2016, according to the latest figures from ASE.

The profitability experts said the deterioration in performance was driven by lower vehicle sales profits and decreased overhead absorption resulting from lower aftersales gross profits and higher overheads.

Back-end bonus levels were down year on year as expected. Some franchises were enabling the early recognition of these bonuses throughout the year and there was a natural impact of the lower level of new vehicle volumes compared with 2016. This combined to move December from a bumper profit month to just below break-even.

However, ASE said that despite this there were optimistic signs for 2018, with preliminary results showing the new vehicle market down less than feared for January, coming in at close to the predicted volume reduction percentage for the entire year.

It added: ‘Given the strength of the first quarter in 2017, it was reasonable to expect us to be significantly down year-on-year, maybe into double digits. However, this is not going to be the case.

‘This potential improvement in new car outlook, combined with huge potential in aftersales and used cars, could well lead 2018 to be better than expected.’

MORE: Dealers heading into a spell of reduced profitability, says ASE

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