Solid September result sees average UK car retailer slightly outperform 2018

1:50 pm, November 6, 2019

DEALERS saw a slight rise in profitability in September but the rest of the year will be challenging, according to profitability specialist ASE Automotive Solutions

The average profit increased from £60,000 to £63,000, and chairman Mike Jones said: ‘I was expecting an improvement in September profitability. However, as with the slight rise in overall registration levels, it was not as big a bounce as expected.

‘Overall, retailer profits for the month rose by £3,000 on the result for the prior year, which was itself depressed as a result of WLTP-related supply issues.

‘September saw the seasonal increase in used car stocks as a result of part-exchange vehicles and retailer registrations. This produced a fall in the return on investment on used cars and a lengthening of the average days in stock. Retailers need to increase the speed of stock turn to hedge against any potential falls in residual values.

‘Overall, aftersales performance remains stable. Whilst we have seen a slight fall in overall efficiency year on year, profitability has risen slightly as a result of the increased pool of technicians. Maximising this profit area remains key to medium-term profitability prospects.

‘Whilst September profitability was slightly above the prior year, the outlook for the remainder of the year remains challenging, albeit not disastrous. It looks like registration levels will fail to match the SMMT forecasts and used car and aftersales profitability will have to rise to fill the gap in the overall result.’