Dealer Profitability Declines

Automotive business management specialist ASE says rolling 12-month dealer profitability fell slightly in November, with the average car dealer recording a loss of £4,000.

This was reportedly larger than the loss reported in November 2012, but follows record levels earlier in 2013.

Mike Jones, ASE chairman, said: "The slight profitability dip in the past few months means that we now seem unlikely to hit a return on sales of 1.5 per cent. However, top performers across nearly all brands will make more than five per cent.

“At the end of October, we highlighted a potential issue within used car stock believed to be a result of self registration exercises undertaken at the end of quarter three.

"Dealers have made significant inroads into cleansing their stock in November with average stand-in-values dropped by more than £1,000.”

It means the trade is now unlikely to hit an annual return on sales of 1.5%. However, the top performers across nearly all brands are expected to make over 5%.

ASE predicts that dealers will achieve significant registration bonuses for the final quarter to bolster the year-end result.

It also notes that dealers made significant inroads into cleansing their stock during November, while still making a gross profit of over £1,000 per unit.