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Average car dealer profits fell 6.7% in March, says ASE

ASE chairman Mike Jones

The average UK dealer made a profit of 106,771 in March, marking a fall of  £7,700 - or 6.7% - from the prior year total.

The plate change month’s result brings the overall result for Q1 in 7.5% below the record enjoyed during the first three months of 2017.

March’s fall is well short of the 12.4% drop in new car registrations for Q1.

Fall in overhead absorption seems weather related

“We saw a significant drop in overhead absorption during March, which was down to a decrease in aftersales contribution for the month,” said Mike Jones (pictured), chairman of ASE, which collated the dealer composite data.

“This looks stem back to the poor weather at the start of March, with many businesses not recovering the lost hours in the workshop and barely matching their performance from 2017 when in previous months we have seen growth.”

Dealer performance KPIs for March 2018 (ASE)

Continued used car strength despite stock rise

During March the market saw continued strength in used car performance with margins and stockturns remaining strong.

“There is no sign yet of a deterioration in the market, however we have noted an increase in stock holding at the end of March. The profitable disposal of these vehicles will be vital as we progress through Q2 and into the remainder of the year.”

Factors to watch in the remainder of 2018

“It looks like we will finally have some good news on the registration front in April, with an increase of over 10% and good growth in private retail registrations,” said Jones.

Whilst there was, as always, a rush at the month-end, registrations were ahead of the prior year for the majority of the month indicating that the improvement was not just a result of a raft of self-registrations.

“As we move through the following months we are starting to see the WLTP regulations have an impact on vehicle supplies.

“Whilst this may not change the overall number for the year, it could lead some registrations being pulled before the deadline and some postponed.”

> MORE: franchised dealer performance KPIs

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