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'High registrations don't spell profit improvements' - ASE

The average UK motor dealership made a profit of £5,000 in May 2014, a slight drop on the £7,700 made in May of the prior year. This led to a fall in the net profit percentage.

On its motor retail profitability statistics report for May, Mike Jones, ASE chairman, said: "The performance does, however, show some encouraging signs.

"The UK motor trade is totally dependent on the hitting of quarterly targets, with many dealers no longer recognising bonuses on a monthly basis.

"Average total turnover for May was up 9%, with new vehicle sales up 14%. This clearly bodes well for Q3 targets, albeit it is further evidence that a lot of metal is being moved for very little margin in most brands."

Used vehicle performance remained steady in the month, although ASE continues to see a slow and steady decline in the days in stock.

"Whilst there is no sign of a price crash yet, with many dealers reporting to us they are short of stocks, improvements in vehicle stockturn are clearly welcome.

"The decline in vehicle sales expenses as a percentage of growth appears to have stopped, although we will only truly be able to assess this at the end of the second quarter once all the bonus income is recognised.

"June performance will clearly be key to setting the overall trend for the year and confirming whether the increased volume is actually producing increased profit at the dealer level. June 2013 profits of £27,000 per site should be beatable given current volumes so we are likely to see the profit per site improve once more."

UK motor retail profitability statistics - ASE May 2014

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