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Average dealer profitable in July as industry weathers the storm

Average dealer profitability increased year-on-year in July to 1.1% net profit as sales with the motor trade appearing to weather the storm of a tough market place.

According to the latest profitability results from ASE, the 1.1% ROS came despite a fall in average overhead absorption rates year-on-year down from 61.6% down to 59.2% in July. The benchmark is 80%.

In a month which over recent years has become a constant loss-maker the average dealer made a small profit.

While the total turnaround is less than £10,000 it is important to see dealers making profits in the non-vehicle registration months.

The source of the improvement remains the vehicle sales departments.

The average dealer is showing increased new vehicle sales and increased average used vehicle gross margin which is now 8% up on 2011.

While individual dealers may be feeling registration pressure, especially at the moment, the drop in the number of retail outlets is producing an average increase in units sold.

Dealers are also getting a greater return from their investments in costs in 2012.

Sales per salesman have increased significantly and, as a result of cost control and a unit increase, average vehicle expenses per retail sale and as a percentage of gross have dropped significantly.

Mike Jones, ASE chairman, said: “Maintaining this through the remainder of 2012 and into 2013 is a key.

“As we pass through the September registration month it will be interesting to see whether self-registration activity impacts the average used vehicle stock position.
“Average stand in values have been dropping as we moved through the summer, with dealers both reacting to the market and selling vehicles registered during previous campaigns. Given current market activity we would expect the average to rise again at the end of September.”

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