Car dealers reduced their July losses by almost £5,000 year-on-year to “emphasise improvements made over 2017”, ASE’s monthly profitability report has shown.
The average UK car retailer made a loss of £1,600 during the month as the rolling return-on-sales figure fell to 0.9%, compared to 1.02% during the same period in the previous 12 months, but ASE director Mike Jones described the month’s performance as “comparatively strong” nonetheless.
Jones said: “While a £1,600 loss is not back to the heady profits made during periods of significant fast-start bonuses, it further emphasises the improvements being made over 2017.”
ASE’s monthly reports showed that the number of sales per dealer sales executive had risen from an average of 155 in the 12 months to July 2017, to 161 during the past 12 months and Jones’ comments rightly predicted that the switch over from NEDC fuel economy and emissions testing to WLTP and RDE on September 1 would artificially inflate August’s trading.
He said: “This year will likely see some reduction in the historic losses given the pre-WLTP deadline increase in registrations, which looks set to rise by 23%.”
He added: “Whether these cars have been sold, or merely registered, will prove pivotal to both August and annual profitability.”
ASE said that used cars and aftersales had delivered strong results for retailers during July. Sales numbers improved as stock turn sped-up during the month.
But the figures published by ASE revealed that return on investment on used cars had declined with this rise in volume, falling from 88.5% to 84.5% on average.
Jones suggested that new car supply in the wake of the introduction of WLTP and RDE test regimes would see car retailers operating in a challenging environment during the usually buoyant ‘plate-change month of September.
He said: “New car supply issues will no doubt have an impact on retailer profitability in the last four months of the year.
“Although the August registration increase looks huge, it is dwarfed by the September target and how close we get to that will be pivotal to the overall profitability level.”