Profit sensitivity is highlighted in the new performance figures released today by ASE.
They show that money is only being made during 'fast-start' or quarter end months.
Reporting on August figures, ASE reports the average dealer lost just over £15,000 in the month.
"This marks a £4,000 deterioration compared to August 2013 and shows that whilst plenty of metal is being shifted, profits are only being earned during fast-start or quarter-end months," said Mike Jones, ASE chairman.
This loss has pulled the rolling 12 month return on sales below 1.5% for the first time since March, however it is confident that this trend will be reversed in September.
"Turnover for July and August is 10% up on the 2013 comparative and the registration statistics for September were strong so we should see profitability rise above 1.5% once more.
"This does, however, represent the second consecutive month where we have failed to reproduce the profits earned during the prior year."
Used car performance improved slightly during the month with a fall in stock days and an improvement in return on investment.
"There is significant scope for both to improve further. However, we will be monitoring for the effect of self registered vehicles during September on results and stock mix over the coming months.
Aftersales performance remains largely static, with marginal gains in overall efficiency being balanced by increases in overheads to produce a slight fall in overhead absorption.
"With a raft of new CI programmes being implemented aftersales revenues will have to grow quickly to stop absorption falling back towards 50%," said Jones.
Six months performance stats
| Key ratio | Benchmark | Mar-14 | Apr-14 | May-14 | Jun-14 | Jul-14 | Aug-14 |
|---|---|---|---|---|---|---|---|
| Average dealership profit | £96,000 | £9,000 | £5,000 | £31,000 | £3,800 | -£15,000 | |
| Net profit as % of sales | 3.00% | 1.55% | 1.55% | 1.52% | 1.54% | 1.51% | 1.48% |
| Overhead absorption % | 80% | 57% | 57.90% | 56.10% | 56.50% | 56.40% | 56% |
| Used: new sales | 1.5:1 | 0.88:1 | 0.88:1 | 0.87:1 | 0.87:1 | 0.87:1 | 0.87:1 |
| Vehicle sales expenses as % gross | 50 | 61.7 | 61.6 | 61.7 | 61.6 | 61.68 | 61.9 |
| Sales per salesman | 150 | 202 | 200 | 201 | 199 | 198 | 198 |
| Used vehicle stockturn (days) | 45 | 56 | 55 | 55 | 54.7 | 54.73 | 53.7 |
| Return on used car investment % | 100 | 81.2 | 82 | 82 | 81.7 | 82 | 82.6 |
| Overall labour efficiency % | 100 | 81.4 | 81.5 | 81.7 | 81.8 | 82 | 82 |
| Service gross profit % on labour | 75 | 75.9 | 75.8 | 75.8 | 75.8 | 75.8 | 75.8 |
| Service expenses as % gross | 40 | 56.7 | 56.9 | 57.2 | 57.2 | 57.3 | 57.6 |
| Hours per retail job card | 2.5 | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 |
| Parts gross profit % | 22 | 22.4 | 22.3 | 22.3 | 22.3 | 22.2 | 22.2 |
| Parts expenses as % gross | 40 | 44.4 | 44.6 | 44.8 | 44.7 | 44.7 | 44.7 |
| Parts stockturn | 8 | 7.7 | 7.7 | 7.75 | 7.79 | 7.84 | 7.85 |
Jeremy has been a journalist for 30 years, 20 of which have been in business-to-business automotive. He was a writer and news editor on AM-sister brand Fleet News for three years before setting up the AM website. For the last five years he has been Bauer B2B’s head of digital helping to manage the digital assets of AM, together with Fleet News, Commercial Fleet, Rail and Smart Transport.
Stephen Jordan - 17/10/2014 09:18
It has been drawn to my attention during a recent meeting that ASE make these claims yet the likes of JLR, BMW, Mercedes and a number of other brands are not included in these figures, therefore to make such bold statements is very dangerous