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Dealer profitability in the red

The analysis of dealer profitability has shown a small loss nationally in February, putting year-to-date figures into the red.

Net profit as a percentage of sales was -0.5% year-to-date compared to -1.1% last year. ASE’s benchmark is 3%. Overhead absorption fell to 61.8% from 63.7% and used vehicle stockturn increased from 32 to 55 days (see table below).

ASE partner Mike Jones said: “February is traditionally a poor month as a result of the small number of working days and a concentration on March plate-change. 2010 proved no different with the average dealer losing just under £5,000 in the month. Following on from the poor performance in January this left the average retailer with a year-to-date loss of £7,000.”

Despite 2009 being a record year, dealers are significantly ahead of this at the end of February, he said, acknowledging though the results reflect a pre-scrappage scheme market and some dealers were working through over-valued used stock from the previous year.

The average motor retail outlet made more than £130,000 in 2009 – a return of 1.3% on sales and a turnaround in fortunes.
2008 proved to be the most difficult year since ASE began collating average dealer performance figures in 2001.

Net profit as a percentage of sales in 2009 was an average 1.3%, compared to -0.2% in 2008. And sales per salesperson was 176 units compared to 144. Year-to-date 2010 the figure is 134.
Jones said dealers now need to concentrate now on used vehicles and aftersales to bridge the profit gap.

“Dealers need to do everything possible to drive forwards service retail sales and get back to concentrating fully on used vehicles.”

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