The average UK car dealer continued its strong performance in April producing a profit of just over £9,000, according to the latest profitability figures from ASE.
UK dealers increased profits by 36.4% from £6,600 in April 2013. Average return on sales (ROS) was at 1.55% on average for the rolling 12 months to April 2014. The ROS benchmark is 3%.
ASE said the April performance was very creditable given the impact of Easter and the inevitable lull after the end of quarter one.
The net profit return on sales percentage dropped slightly from the highpoint of March as a result of the volume of business transacted, however dealers are still adding to their bottom line result and building their service parc for the future.
Mike Jones, ASE chairman, said: “The strong result is still being primarily driven by new vehicle sales and, with March showing us that some dealers are being prudent in recognising bonuses, it may be that the final profit is better than first indicated.
“The average dealer has sold an additional 48 new cars and 41 used cars compared to the prior rolling 12 month period indicating that the increased registrations are feeding through to increased sales. This is further echoed in used car stock where we have seen practically no change in the average stand in value over the March plate-change month.”
Average dealer overhead absorption ratio has continued its slow and steady improvement, albeit still at a historically low figure of 57.9% for the rolling figure for the 12 months to April 2014. The benchmark for overhead absorption is 80%
Jones said: “This is very pleasing to see with a steady reduction in idle time and increased labour efficiency.
“While there remains significant spare capacity this is slowly being eroded driving aftersales profitability.”