Dealer profits fall to average of £3,000, pre-registrations rise - ASE

The average UK motor dealership produced a marginal profit in April 2015 of £3,000.

This failed to match the profit recorded in April 2014 of £9,000 and resulted in a further fall in the average dealer rolling 12 month profits, according to dealer performance specialists ASE.

This has now fallen for four consecutive months to just over £200,000, with each month in 2015 failing to live up to its prior year comparative.

“The cause of the drop remains a decline in the performance of the vehicle sales department and decreases in overhead absorption as a result of increased costs,” said Mike Jones, ASE chairman.

The current situation can be summarised looking at the vehicle sales expenses as a percentage of gross profit ratio.

“This has been rising month-on-month since June 2014 and reflects the fact that dealers are doing more and more business for a decreasing return on the back of increased targets.

“Arresting the increase in this ratio will be vital to ensure that average dealer profitability does not fall below £200,000.”

The April statistics also produced further evidence of an increase in dealer self-registrations.

Whilst used vehicle sales increased 10% on prior year volumes, new vehicle sales dropped by 6%.

This contrasts with the SMMT registration statistics which saw an increase of 5% on 2014 and “the strongest April result in a decade”.

“In the current year-to-date new car sales have dropped 2.3%, compared to an increase in registrations of 6.4%.

“The profitable disposal of these cars will be absolutely pivotal to medium term profitability, particularly as this is a trend which shows no sign of stopping,” Jones said.

UK motor retail profitability statistics - April 2015