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Dealers suffer fall in September and third-quarter profits

Finance: profit risk and loss

The average UK motor retailer made a profit of £68,000 in September, seven per cent down on the £73,000 made in the same month last year.

This leaves retailers £14,000 down on profits for the third quarter of the year and £24,000 down on a rolling 12 month basis, said performance improvement specialists ASE today.

Despite the fall in profits the return on sales percentage actually rose in the month as a result of a 4% drop in monthly turnover.

“We saw from the SMMT registration statistics that registrations were ahead for the month however this was bolstered with 25% of the registrations taking place on effectively the last day,” said ASE chairman Mike Jones.

“Whilst this is a mixture of opportunity, changing of internal fleets and registrations to hit target, actual dealer new car sales were down in September 2016 compared to the prior year.”

The key to future performance will clearly be in the profitable disposal of these vehicles as they enter the used car market, he said.

Initial signs are positive with many dealers reporting record used car performance, both in volume and profit terms and residual values remaining largely strong.

“Stock levels are high, which is impinging on return on investment, however profit per unit remains healthy.

“The decline in overhead absorption was stemmed in September and I will be watching to see whether this is the sign of a genuine sustainable turnaround in performance or a dead cat bounce.

“As we move into the final quarter registration levels remain high, with the expectation that this will continue through the remainder of the year. Getting profits moving in the right direction is the challenge for all.”

> Franchised dealer performance stats

> ASE is one of the exhibitors at the forthcoming Automotive Management Live expo at the ArenaMK, Milton Keynes. It takes place on November 16.

More information at the event website.

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