The average UK franchised dealer made a loss of £6,500 in July 2016. It represents a deterioration of £10,000 on the performance from the prior year, when July was a profitable month.
“It also is the first time in years when dealers have not made a profit, even a marginal one, in the first trading month of a quarter,” said ASE chairman Mike Jones.
“Before we jump to any conclusions over a general retail downturn or a dramatic impact of the Brexit vote, we need to wait until the end of the quarter. Inter-month performance can vary as brands change their fast start bonuses and dealers change their internal policies, so we should not read too much into the result of a single month.”
He said one trend which cannot be ignored, however, is the fall in the net profit as a percentage of sales ratio year-on-year. “Across the board dealers have seen significant increases in turnover levels and have struggled to make as much money as they did in the prior year.
"This is expected to continue as we finish 2016 with profit levels looking like being, at best, on a par with 2015.”
There is no sign, yet, of the current level of tactical registrations leading to unbearable strain on the used car market, with return on investment remaining stable, he said.
Retailers have moved over recent months to improve their stockturn and this will continue to be an area of focus through the remainder of the year.
As editor, Tim is responsible for the media content, planning and production of AM's multiple channels (AM print and digital magazines, website, social media and contributing to our events planning). He interviews and writes about as many franchised dealer groups and UK divisions of motor manufacturers as possible, to explore the issues facing UK motor retail and understand what solutions dealers and suppliers are using to overcome these.
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