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UK dealer profitability hits a new high

Time 8 years ago

310113-1-bcaTHE average UK car dealer made a profit of more than £9,000 in October, according to automotive advice and servicing specialists ASE.

This represents a slight improvement over the same month in 2012, producing further growth in the average return on sales.

Mike Jones, ASE chairman, said: ‘Profitability has nearly reached £190,000 for the average site on a rolling 12-month basis – the highest level since we began reporting the statistics.’


Profitability from vehicle sales departments has stabilised recently however, with dealers no longer making gains as significant as they once were.

And Jones added: ‘Used vehicle performance dipped slightly in October with the rolling 12-month return on investment in used cars falling under 80 per cent for the first time since March.

‘There has been little movement in this ratio throughout 2013 as it has sat within touching distance of 80 per cent for the average dealer.’

The average stand in value of used cars has grown significantly and currently sits at just under £10,000. This represents a 16 per cent increase over October 2012.

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‘Profitable disposal of the nearly new vehicles which have produced this spike will be vital to dealers’ long-term profitability, with a real risk that this stock will produce a steady decline in used car return on investment,’ said Jones.

There was a drop in the average profit margin on used vehicles to 11.1 per cent in October.

Looking at aftersales, there has been little change. Those dealers with strong retention strategies are the ones who can look to the future with most confidence.

Jones added: ‘The increase in the vehicle parc should help performance in 2014, with a reduction in idle time improving overhead absorption.’

 

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Car Dealer has been covering the motor trade since 2008 as both a print and digital publication. In 2020 the title went fully digital and now provides daily motoring updates on this website for the car industry. A digital magazine is published once a month.

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