The ASE consultancy has confirmed that, despite bumper registration figures, 2016 saw an average dealer profit of £178,000 per site, down nearly £20,000 from 2015 levels.
The year continued the recent trend of dealers working harder for lower returns, with manufacturers setting higher targets. The manufacturer target requirements could be seen having a big influence in December 2016 when dealers outperform the prior year, reflecting the increasing reliance on bonuses for hitting overall targets.
ASE said that the “decline in profitability was principally down to a fall in vehicle sales & department profits, as a result of increased targets squeezing margins and hitting average profit per units.”
The consultancy suggests that the retailing model in the UK evolved in 2016, being characterized by new vehicle sales falling 10%, being replaced by increased used vehicle sales. Dealers increasingly self registered units to hit targets and retailed these cars as used vehicles.
ASE concluded by stating that self registration process was “well managed throughout the year as reflected by the strong used car return on investment results. Further focus needs to be placed on this in 2017, with a reduction in the days in stock being desirable.”