The average UK car dealer saw a year on year profits rise 50% to £9,000 in April, according to the latest data from ASE, the dealer profitability specialist.
The improvement was achieved despite a fall in return on sales from 1.3% to 1.23% in the rolling year to date.
“The fact that we have seen the return on sales ratio fall despite this improvement shows the growth in turnover levels we are experiencing in the current market,” said ASE chairman Mike Jones.
“Given the current vagaries of the market it will be impossible to tell whether this is a genuine profitability improvement or the effect of manufacturer fast-start activity until the end of June. One thing which is for certain is that the level of genuine retail activity has undoubtedly slowed in the second quarter. Whether this is the result of people postponing purchases until we have some certainty over the referendum or whether it is a result of a genuine slowing of demand we will have to wait and see.”
In the rolling year the average sales per sales person rose from 185 to 190 units, used car stock improved slightly from 55 to 54 days and overall labour efficiency improved from marginally from 82.2% to 82.6%.
“Whilst dealers’ used car stocks peaked at the end of March, considerable good work was done during April to bring the value and volume of vehicles down. This was done without impacting margins indicating that we are not yet seeing the forecast drop-off in the market.
“An improvement in used vehicle stock-turn would be desirable to head off any risk, however it is not harming used vehicle margins yet.
“Whilst registration levels are improving month-in month-out the market is definitely more challenging than it was. Fingers crossed it will improve after the referendum.”
ASE Average Dealer Profitability April 2016
