In the 12 months to October the return on sales was 1.3%, well down on the 1.47% achieved in the 12 months to October 2014, according to dealer profitability specialist ASE.
The fall is a result of a 7.5% fall in year to date profit being exacerbated by a 3.9% rise in turnover levels.
October saw new car registrations as measured by the SMMT, which included self-registrations, fall 4% while real new car sales as measured by ASE, fell 1%.
On a year to date basis, new vehicle sales were marginally behind last year, in a market which was 6.4% up.
October saw the used car market performing strongly.
“Used vehicle sales continued to perform strongly as the self-registered cars were re-marketed with used volume up 2% in the month and 6.5% year to date.
“The drop in used car return on investment is slightly concerning and dealers need to manage this. October saw the double whammy of a drop in average used vehicle gross to 3% below the rolling 12 month average and an increase in average stand-in-value to over £9,500, which is 3% above the recent average,” said ASE chairman Mike Jones.
“Overhead absorption continued its rapid decline, dropping 0.4% in the month. Whilst October should be a relatively good aftersales month dealers, on average, only absorbed 54% in the month, which is significantly down on last year’s 59%.
“Whilst profits were slightly down, the biggest driver in this was an increase in overheads of 6% year-on-year. This is a trend we expect to see continuing.”
Jones added that whole 2015 looked set to see record new car registrations the same would not apply for profitability.
