Steady start reported for third quarter as average retailer reduces losses

Time 2:23 pm, September 4, 2018

THE average UK motor retailer produced a comparatively strong performance for July, reducing their loss for the month by more than £5,000 compared with the previous year, reported ASE.

According to latest figures from the dealer profitability specialist, while the loss of £1,600 wasn’t exactly back to the heady profits made during periods of significant fast-start bonuses, it further emphasised the improvements being made over 2017.

Source: ASE

Continued improvement was expected in August, which is traditionally a tough month for retailer profitability, with customers focused on holidays and momentum building towards the September plate change, it said.

ASE added that this year will likely see some reduction in the historic losses, given the pre-WLTP deadline increase in registrations, which look set to rise by 23 per cent.

Whether these cars have been sold or merely registered will prove pivotal to both August and annual profitability, it added.

ASE chairman Mike Jones said: ‘During July, we continued to see a strong performance from used cars and aftersales. Stock-turn days and overall stock levels have remained steady, and I will be watching these to monitor the impact of WLTP self-registrations.

‘New car supply issues will no doubt have an impact on retailer profitability in the last four months of the year, and while there will be some temporary disruption, overall fundamentals remain strong.

‘This should lead to a continuation in the healthy performance being delivered from used car and aftersales departments. The key question is whether this will be sufficient to compensate for the temporary disruption to new vehicle profitability resulting from delays in the supply of newly tested vehicles.

‘Although the August registration increase looks huge, it is dwarfed by the September target, and how close we get to that will be pivotal to the overall profitability level.’

MORE: Average dealer profitability up in May

MORE: Average UK motor retail profitability down in March

MORE: ASE’s profitability figures reveal positive January for dealers

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