Tough May sees retailers rack up losses of almost £10,000

Time 10:20 am, July 5, 2019

RETAILERS slipped into loss by just under £10,000 per site in May, according to the latest figures from ASE Global.

It more than clawed back April’s gains and left retailers behind for the quarter.

Mike Jones, chairman of the the dealer profitability specialist, said: ‘A sizeable cause of the drop in overall performance is a fall-back in used car performance. Whilst retailers have now managed their stock back down from the March highs to the non-quarter-end norm, this has come at a cost of margin.

‘The recalibration of book values over the recent months has clearly had an impact, and now this has washed through, we can return to normal levels of profitability.’

He added: ‘For the month of May, the retail content of overall aftersales hours fell to 48.6 per cent. This represents the first time it has fallen below 50 per cent and reverses some of the recent gains we have seen. I will have to wait to determine whether this is an isolated blip. However, the significant level of warranty work currently being undertaken for some brands is having a negative impact on retail.’

Retailers broke even in May 2018 – a strong performance for a mid-quarter month – and Jones said: ‘It is important not to read too much into the results for May [2019], particularly after the comparatively strong results of previous months. We have seen a correction in used car values, removing some previous over-valuation, and the mid-quarter month is always challenging, with May 2018 being an exception.

‘I will only get a view on the overall values at the end of June, when the quarter is closed. Whilst the registration levels were not far behind the prior year, there was a significant amount of registration activity at the month-end to achieve this. I will be watching carefully how these bonuses are earned and ultimately released to see the overall impact on the year.’

MORE: Steady April result for retailers as profitability holds up despite volume drops 

MORE: Profitability improves in March as retailers prosper despite uncertainty

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

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