Average profits for UK motor retailers in September have been estimated at £77,000 by consultants ASE. The figure is an £8,600 improvement on profits achieved in the same month in 2016.
The data also looks good when Q3 is compared with the previous year, with Q3 2017 coming out £6,000 ahead. The September performance also pushes site profitability above the prior year on a rolling 12 month basis to £191,000.
ASE single out reduced franchise targets as the magic that delivered increased profits on lower sales. With more realistic targets in many cases, dealers were able to hit the mark, and record annual bonuses early.Average retailer used car gross profits stood at well over £1,000 per unit for the month of September.
ASE notes a slight rise in the average stand in value per unit at the end of September, indicating an increased presence of self registered units. This bucks the plate-change month norm where the volume of part exchange vehicles usually drives down average levels. The consultants comment that “The profitable disposal of these vehicles will be key to medium term performance, with retailers requiring to re-profile their stock.”
ASE suggests that September could set the tone for the remainder of the year, if franchise targets continue to reflect market realities. They project “new vehicle sales volumes to be down in the final quarter.” But counter that “providing targets are adjusted proportionately retailers can still prosper albeit it will likely be a hard slog. Used and aftersales performance should remain strong providing the self registered cars are processed efficiently.”
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