Profitability improves in March as retailers prosper despite uncertainty

Time 9:00 am, May 6, 2019

THE average UK motor retailer made a profit of £118,000 in March – an improvement of £5,000 over the result for March 2018 – according to new figures from ASE Global.

The dealer profitability specialist hailed it as ‘a very creditable performance underlying the resilience of both UK motor retailers and the motor retail model’.

Mike Jones, chairman of the company, said: ‘To improve profits whilst consumers and businesses were faced with the massive Brexit uncertainty we saw during March is a strong result.’

But, he added: ‘Amid the good news on overall profitability, we saw a fall in used car return on investment in March. This is now below 80 per cent for the first time since the end of 2016. Used car profitability has remained constant over recent months. However, we have seen an increase in average stock holding which is driving the return ratio down and slowing stock turn.

‘The slow and steady improvement in the overall level of profit generated by the aftersales departments continued during March. We have been benefiting from the increased vehicle parc over recent years and this is improving labour efficiency and driving profit. The one area of concern is the high level of warranty content, particularly among some brands, depressing retail.’

Looking ahead, he said: ‘In spite of the general level of uncertainty and challenges noted by the wider retail industry, motor retail is producing a creditable performance. Profitability is up slightly on last year in the first quarter, which is a strong result.

‘As we move through the remainder of the year we come up against some weaker comparatives, particularly within the brands heavily impacted by WLTP delays. This should leave retailers well placed to outperform their prior year results.’

MORE: February 2019 matches 2018 loss with all eyes turned to March

MORE: January profits outperform 2018 despite drop in registrations

MORE: December profit sees UK motor retailers outperform 2017

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