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Average dealer slips into loss in May, but healthy bonuses still likely - ASE

The average UK motor dealership registered a tough May giving up all of the gains over 2015 registered in April, plus a bit more.

Mid-quarter months have become very tough and May was no different with the average retailer registering a loss of £10,315.

Whilst this loss is £10,000 greater than the prior year an average loss of over £10,000 has become the norm in the middle month of a quarter.

The effect of this is to take the rolling 12 month dealer profit back fractionally under £200,000.

ASE chairman Mike Jones said: “We will clearly have to wait until the accounts for June have been closed to see the effect on overall profitability for the quarter and it’s certainly too early to call this as the start of a slowdown.

“Profitability for the year to date remains £2,000 ahead of the first five months of 2015 and, given the level of registrations, I would expect healthy bonuses to be earnt.”

The continued decline in overhead absorption sees dealerships become ever more reliant on new and used vehicle sales.

“This will be important if there is any slowdown in new car sales as a result of the Brexit vote.”

The drop in the value of sterling against the Euro will likely see a reduction in the supply push of vehicles into the UK, Jones said, albeit in the first instance this will just reduce some of the “froth” of pre-registration activity.

“These are cars the dealers make very little profit on, if any at all, so we may see a rise in the return on sales percentage as a result.

“The danger for dealers would be in, a slip into recession, although the business model is inherently robust with the opportunity for used cars and service work when new car sales become more of a challenge.”

> May key performance figures and historic dealer performance stats from ASE

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