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Car dealers improve November profitability by £10,000

ASE chairman Mike Jones

Car retailers avoided a repeat of the record losses incurred during November 2017 with their trading during the penultimate month of 2018, but still posted an £8,500 average deficit.

ASE’s latest monthly car retail profitability report said that the struggle to cope with the effects of a “cooling market” towards the end of 2017 had not been replicated and, instead, losses reduced to “more normal levels” for the time of year.

Return on sales remained flat year-on-year, at 0.97%, as return on used car investments rose from 83.5% to 86.6%.

Despite a declining market – as reported in yesterday’s full-year 2018 registration results from the Society of Motor Manufacturers and Traders (SMMT) – retailers’ sales executives still outperformed ASE’s benchmark of 150 sales, with a total of 157, but this was down on 2017’s 161 average.

Mike Jones, director of ASE, who compiles the monthly report, said: “We continued to see a wide variance in performances between franchises in November, with some retailers producing unseasonably profitable results on the back of product finally being released post-WLTP testing.

“This was countered by other retailers who continued to struggle with stock availability, as shown by the registration statistics.”

Jones noted the strength of car retailers’ used car operation in his report, stating that the sector had taken up the slack” during 2018.

He added: “Given all of the shocks and challenges the UK motor sector has had to deal with, it looks like the overall result for the year will be healthy and only slightly behind the overall result for the prior year.”

Jones said that retailers’ fortunes remained dependent on manufacturer bonuses at the year-end, but suggested that these should reflect the supply constraints presented by the implementation of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) in September.

“However, the strength of used cars and aftersales has allowed many retailers to more than compensate for the new car fall,” he added.

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