Dealer profitability up this summer

Dealer profitability up this summer

Mike Junes of ASEAverage UK dealer monthly profit hit £46,000 in June – an increase of £3,700 over the same month in 2016.

This rise in profits was achieved despite a drop in registration levels – industry consultants ASE point to strong first quarter profits balancing a lower performance in the second quarter of 2017.

ASE chairman Mike Jones said: “Overall year to date return on sales remains precariously above 1%, showing a marked decrease on the prior year as a result of the significant increase in average sales we have seen over the past 12 months.”

According to ASE analysis, profitability was once more driven by the vehicle sales department, albeit with minor improvements in overhead absorption continuing. Return on used car investment remains comparatively high, indicating the strength of this sector. Whilst stock levels are still high on the back of dealer self-registration exercises, overall industry gross profit is still healthy at 13%.

Jones added: “There remains no sign of the feared crash in used car residual values; however, we will continue to vigilantly watch for any early warning signs as we progress through the second half of the year.

“Quarter three performance has started slowly, with registrations down 9% on the prior year. Given the volume splits of the quarter we will only gain a true picture of performance once we have closed September. However, I would expect profits to follow a similar pattern as in prior quarters with under-performance in the first two months preceding a bumper bonus to finish.”