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September plate-change boosts average dealer profits

The average UK  dealer made a profit of £67,000 in September boosted by customers heading to showrooms in the plate-change month.

According to the latest dealer profitability figures ASE, profits saw a £10,000 increase compared to September 2012 and continued the increase in the rolling 12 month return on sales which has now crept over 1.4%.

The current year to date return on sales for 2013 is 1.6% with the average dealer having made a profit of nearly £180,000 during the nine months.

Mike Jones, ASE chairman, said: “These record levels of average profitability have been driven by vehicle sales department performance.

“The ratio of departmental expenses to gross profits generated is now approaching 60% which is very healthy for the robustness of the dealership model, particularly with the decline in overhead absorption starting to reverse.”

Used car performance has improved slightly with the average dealer seeing an increase in sales volume, albeit not as large as the increase in new car sales.

Used car gross profit levels have remained static throughout the past year at just over 12%.

Jones said: “In the last quarter of 2012 the average dealer made a small profit. If we see a continuation of the current results this could be considerably improved upon, with a real possibility that the average dealer may make a return of 1.5% for the full calendar year. This would represent the greatest level of return on sales we have ever reported.”

ASE has identified one potential hindrance to the potential performance from the level of used car stock currently being held by dealers.

Jones believes that on the back of the self-registration activity undertaken at the end of September the average dealer has seen a 7% increase in used vehicle stock numbers and a 5% increase in the average stand in value compared with their position at the end of September 2012.

He said: “This appears to have been further exacerbated by fast start registrations for Q4.

“The profitable disposal of these vehicles will be vital to overall returns for the end of 2013 and the start of 2014.”

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