5:59 pm, December 4, 2018
THE average motor retailer made a profit of £6,000 in October, according to the latest figures from ASE.
The sum represented an improved performance over the same month last year, when the average dealer recorded a small loss.
And the positive result appears to be directly related to the unwinding of WLTP-related supply issues with a number of brands who had a poor September managing to catch up on the vehicle sales front.
Mike Jones, chairman of ASE, the profitability specialists, said: ‘Traditionally, following on from a registration plate-change month, we see a fall in used car stock levels. However, in October, we actually saw a rise from the September levels.
‘Profitability remained strong, and vehicles are in short supply. However, I will be monitoring this as we go through Q4 to ensure that retailers are not storing up potential problems.’
Jones observed that the growth in used car sales volumes shows no signs of abating, with more increases in October.
He noted: ‘Whilst some of the increase has been related to supply-side issues for new vehicles, there also seems to have been a change in focus for franchised retailers as they focus more closely on this part of the business.
‘As we move through the budgeting season, many businesses are finalising their budgets for 2019. This comes at a time where the route to market for new vehicles is continuing to evolve, with increasing levels of direct sales from brands to customers and more agency agreements being introduced.
‘At ASE we will be focusing increasingly on average retailers’ total absorption; the percentage of the total overheads covered by profitability from aftersales and used cars. Whilst some retail networks are a long way from the desired 100 per cent total absorption, we need to move in that direction over the next five years to ensure the sustainability of the current retail model.’
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