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Franchised car dealers reverse 2017 losses into a small profit in May - ASE

ASE chairman Mike Jones

Profit for May

The average UK motor retailer delivered a profit of just under £265 in May, compared to an average loss of £17,000 the previous year.

Despite the fact that May, being a mid-quarter month, is never going to produce huge levels of new car sales the result for May was comparatively positive, significantly outperforming 2017, said Mike Jones (pictured), chairman of ASE that produced the data.

“We appear to be seeing some genuine profitability coming through new vehicle sales, albeit this is very franchise dependent.

“Given the apparent lower level of self-registrations in June this should continue.”

Continued strength in used cars

Used vehicle sales continued to perform well during the month of May.

“We saw significant volume increases during the month, which was offset slightly by a fall in the overall gross margin.

“Stock investment levels continue to fall, which should produce a steady improvement in used vehicle stockturn,” Jones said.

June will determine overall direction of performance

“Whilst we have seen positive retailer performances for of April and May, which is clearly a positive, it is only when we reach the end of June that we will obtain a clearer view of the overall outlook.”

Although registration levels in June were lower for the month than in 2017, this was “entirely” down to a fall in last-day registrations.

“I am therefore expecting overall performance for the month to be strong, with retailers taking fewer self-registered vehicles into Q3.

“As we move through Q3 I am expecting WLTP to start to impact performance, particularly for those franchises with a dearth of vehicles until the new regulations come into force.

Hopefully it will all balance out by the year-end enabling franchises to hit their annual target.”

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