Franchised dealer performance
“Everyone was quiet”.
It’s the call of underperforming managers everywhere at accounts review time. Comparison against other dealers within the industry enables us to not only validate this claim and also spot potential areas of improvement.
In aggregate we can see the overall health of the dealer network in what remains a very low margin industry. We also monitor the direction of travel to see whether things are getting better or worse.
The key ratios enable us to quickly identify areas of underperformance through comparison to our benchmarks and network averages. We can then work with dealers to improve their performance.
ASE Automotive Solutions
ASE Global helps the world’s leading automotive companies to drive profitability, accelerate performance and navigate change. A provider of data-driven insight, solutions and specialist software, ASE works with thousands of motor dealers and all major automotive manufacturers across 66 countries. An industry leader for nearly 45 years, ASE’s team of accountants, analysts, software developers and consultants spans 14 offices worldwide. For more information, please go to: https://www.ase-global.com/
Contact:
Mark Junner
T: +44 (0)161 493 1930
| Key Ratio | Jan 2016 | Jan 2015 | Benchmark | |
|---|---|---|---|---|
|
Average dealership profit | £182 | £-59 | N/A |
|
|
Net profit as % of sales | 1.22% | 1.40% | 3.0% |
|
|
Overhead absoprtion | 53.70% | 54.70% | 80.0% |
|
|
Used: new sales | 0.92 : 1 | 0.87 : 1 | 1.5 : 1 |
|
|
Vehicle sales expenses as % gross | 62.90% | 62.70% | 50.0% |
|
|
Sales per salesperson | 182.00 | 182.00 | 150.0 |
|
|
Used vehicle stockturn | 54.00 days | 55.00 days | 45.0 days |
|
|
Return on used car investment | 74.00% | 77.70% | 100.0% |
|
|
Overall labour efficiency | 82.70% | 82.00% | 100.0% |
|
|
Service gross profit % on labour | 75.60% | 75.60% | 75.0% |
|
|
Service expenses as % gross | 59.70% | 58.80% | 40.0% |
|
|
Hours per retail job card | 1.60 | 1.64 | 2.5 |
|
|
Parts gross profit % | 22.50% | 22.30% | 22.0% |
|
|
Parts expenses as % gross | 44.00% | 44.60% | 40.0% |
|
|
Parts stockturn | 7.50 | 7.60 | 8.0 |
Commentary
The average UK motor dealer made a profit of £182 for the month of January, a marginal but psychologically
significant improvement over January 2015 where retailers produced an average loss of £59.
Whilst rolling 12 month profit advanced marginally as a result, we saw a drop in the average return on sales from December as a result of a 3.6% rise in turnover in the month.
Whilst the January volumes of new car sales are small in comparison to March, it was interesting to see a 2.3%
increase in sales, as compared to a 2.9% increase in registrations.
We will monitor the February numbers closely to see whether the increase in private registrations was matched by an increase in sales, or whether dealers are changing the way they self-register vehicles.
Used car sales were up over 4% compared to January 2015 with a 3% increase in the average stand in value.
Stocks remain high, up 3.6% in volume and 7% in value terms, and this is driving down used car return on investment.
Indeed, January 2016 marked the first time when the average retailer had over £600,000 invested in used car stocks.
We will continue to monitor stock levels as it is vital these are brought down over the coming months, particularly seeing as for some dealers total investment is understated as pre-registered vehicles are held outside used car stock until they are made available for sale.
As we move through 2016 we expect to see rises in turnover every month and profits will have to grow
significantly if we are to avoid further reductions in the net profit as a percentage of sales ratio.
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