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Market slowdown leaves dealers an average £17,000 in the red in May - ASE

Mike Jones, ASE

The average UK motor dealer made a loss of just under £17,000 in May, a deterioration of £7,000 from the same month in 2016.

The figure leaves the overall rolling 12-month return on sales at a fraction over 1%, with a profit of just over £180,000.

It represents a drop of £17,000 from the position in May 2016, according to figures from performance improvement specialists ASE.

“Historically May was one of the few mid-quarter months where dealers made profits,” said ASE chairman Mike Jones.

“However, as we have increasingly moved to a bonus-based profit structure and dealers have become more conservative over accruing bonuses, this has changed.”

“Looking at May, I have a slight concern over the current levels of used car stock.

“Whilst return on investment remains healthy (81%) and growing as a result of strong volumes and margins, used vehicle stock days are creeping up, with days on stock now at 57 - they've not come down since the end of the first quarter of the year.

“This appears to be a result of taking time to dispose of tactical registrations. Dealers need to do all they can to manage stock days downwards, reducing their risk in the event of any downturn in prices.

“We will only get the overall picture therefore once the June results are posted. However, it is unlikely dealers’ will match the result from the prior year.

“Whilst registration levels were only marginally behind the prior year, with 40% of the months’ registrations taking place in the last couple of days of June, a significant increase on the prior year, presumably bonus earnings (and profit) will be down.

“Early signs are of a slight loosening of the purse strings in July as we start Q3, albeit with less fast start activity than we saw in the prior year.”

Video commentary

 

> Franchised dealer performance figures

 


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