Dealer profitability specialist ASE has warned rising used car stock levels are having a negative impact on dealers.
Commenting on dealers’ performance in January ASE chairman Mike Jones said used car stock in terms of units and values were on the rise.
“Stocks remain high, up 3.6% in volume and 7 % in value terms, and this is driving down used car return on investment,” he said.
“Indeed, January 2016 marked the first time when the average retailer had over £600,000 invested in used car stocks,” he added.
ASE composite figures show that used car sales were up over 4% compared to January 2015 with a 3% increase in the average stand in value.
ASE said it will be keeping a close eye on the used car performance in 2016..
“We will continue to monitor stock levels as it is vital these are brought down over the coming months, particularly seeing as for some dealers total investment is understated as pre-registered vehicles are held outside used car stock until they are made available for sale,” said Jones.
Overall, the average UK motor dealer made a profit of £182 for the month of January, near unchanged from the performance a year earlier.
ASE identified a 2.3% increase in sales for the month compared to a 2.9% increase in registrations.
“We will monitor the February numbers closely to see whether the increase in private registrations was matched by an increase in sales, or whether dealers are changing the way they self-register vehicles.
| KEY Ratio | Rolling 12 months Jan 2016 | Rolling 12 months Jan 2015 | Bench-mark |
| Net Profit as % Sales | 1.22% | 1.40% | 3.0% |
| Overhead Absorption | 53.7% | 54.7% | 80% |
| Used: New Sales | 0.92:1 | 0.87:1 | 1.5:1 |
| Vehicle Sales Expenses as % Gross | 62.9% | 62.7% | 50% |
| Sales per Salesman | 182 | 182 | 150 |
| Used Vehicle Stockturn (days) | 54 | 55 | 45 |
| Return on Used Car Investment | 74.0% | 77.7% | 100% |
| Overall Labour Efficiency | 82.7% | 82.0% | 100% |
| Service Gross Profit % on Labour | 75.6% | 75.6% | 75% |
| Service Expenses as % Gross | 59.7% | 58.8% | 40% |
| Hours per Retail Job Card | 1.6 | 1.64 | 2.5 |
| Parts Gross Profit % | 22.5% | 22.3% | 22% |
| Parts Expenses as % Gross | 44.0% | 44.6% | 40% |
| Parts Stockturn | 7.5 | 7.6 | 8.0 |
