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Franchised dealer losses in October prompt end of year profitability warning from ASE

Mike Jones, ASE chairman

The average UK motor retailer made a £2,000 loss in October.

Last year in the same month, dealers scraped to a profit of £187.

The loss has resulted in overall return on sales falling to 1.01% with expectations that it will dip below this in November, according to dealer performance specialist ASE.

"Following on from the stronger than expected September this October performance reflects the challenging current nature of the retail motor sector," said Mike Jones (pictured), ASE chairman. 

"The continued negative press surrounding diesel is certainly having an impact on performance, albeit used car diesel residuals have remained robust.

"Used vehicle performance remains the shining star, with profitability levels remaining strong despite fears of challenges in the market. 

"Whilst improvement could be made in used vehicle stockturn to mitigate any potential risk the feared crash in residual values has not materialised."

Whilst the overall picture for used cars is strong, as noted above, ASE is seeing a polarisation in some franchises. 

"This is typically the case where franchised retailers have a high proportion of very new stock which they are now looking to move on. Whilst the reduction in pressure on new car registrations will help retailers.

"November is always a poor month for motor retailers and we expect this trend to be exacerbated in 2017. 

"The registration statistics released yesterday show a small drop in retail and the decreased supply push feeding through into the fleet market. 

"This will reduce bonus earnings for the month, albeit these are never huge for November. 

"Looking at the quarter as a whole I am expecting the overall result to fall significantly behind the prior year for the average retailer."

> READ MORE: franchised dealer performance figures in detail

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