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Franchised dealer profits in July averaged almost £4,000

The average UK motor retailer made a profit of £3,855.78 in July, matching their result for July 2014, according to ASE data.

“Whilst this may not appear a significant result, making a profit outside the quarter-end bonus months is an indication of health within the industry and enhances dealer stability,” said Mike Jones, ASE chairman.

“The July performance builds upon the positive result for June and indicates that, despite the ever-present registration pressure, the slide in dealer profitability which we saw in the first five months of 2015 appears to have been halted.”

Overall rolling 12 month dealer profitability still stands £17,000 below the figure achieved at July 2014. This is in spite of a 5% increase in overall turnover and combines to produce the significant fall in the return on sales ratio.

Looking at new vehicle sales, the average dealer sold the same number of new vehicles in July as they did in the prior year. With a 3.2% increase in registrations this continued the trend of rising self-registrations, albeit at a much slower rate than earlier in the year.

Used vehicle retail sales showed a 7% increase on the prior year reflecting the remarketing of the self registered cars, albeit with a slight drop in gross profit margin in the month. Average stock levels and average stand in values remain slightly higher than in the prior year, however at present there is no sign of the distressed remarketing of vehicles.

Overhead absorption has continued on its slow and steady decline towards 50% as indirect expenses continue to rise outweighing the marginal gains in service department performance.

“The September new car market will clearly be pivotal to overall 2015 profitability. The cars will definitely be registered – the challenge is to make sure as many as possible are sold,” Jones said.

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