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Dealer profitability strengthened in first half of 2012

The average UK franchised dealer strengthened profitability in the first half of the year, according to ASE Global.

It said there has been a strong start to the year in financial terms, with the average dealership reporting a profit of £80,000.

June alone saw the average dealer make £12,000 profit.

The source of the improvement has been vehicle sales. A significant amount of quarter end bonus money contributed to the result, said ASE.

It said overhead absorption remained a concern, with the reduction in technician numbers impacting on overall gross profit, although productivity and service gross profit look healthy.

Looking forward, ASE said it remained to see whether the significant volume of pre-registered vehicles in the market will prove a huge drain on used vehicle profitability.

It is this, and dealers' ability to hit new car targets while liquidating the nearly new cars, that remains ASE's number one concern for profitability.

Mike Jones of ASE said: "While the numbers are comparatively strong, it certainly doesn't feel that way talking to retailers, many of which are reporting trading as difficult as they have seen it.

"This just further emphasises the flexibility of the UK dealers in adjusting their business model to fit the changing market and ensure they keep their head above water."

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