Cars parked in a row, ready for auction sales

Dealer profits decline in September

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The average UK motor retailer made a profit of £68,000 in September, compared to £73,000 in September 2015.

Overall this leaves retailers £14,000 down on profits for the third quarter and £24,000 down on a rolling 12-month basis, according to dealer profitability specialist ASE.

Car headlights Yet despite the September fall, the return on sales percentage actually rose in the month as a result of a 4% drop in monthly turnover.

ASE noted that although the SMMT registration statistics show registrations were ahead for the month, 25% of the registrations took place on effectively the last day.

"Whilst this is a mixture of opportunity, changing of internal fleets and registrations to hit target, actual dealer new car sales were down in September 2016 compared to the prior year," said ASE chairman Mike Jones.

He continued: "The key to future performance will clearly be in the profitable disposal of these vehicles as they enter the used car market. Initial signs are positive with many dealers reporting record used car performance, both in volume and profit terms and residual values remaining largely strong. Stock levels are high, which is impinging on return on investment, however profit per unit remains healthy."

ASE also found that the decline in overhead absorption was halted in September.

"I will be watching to see whether this is the sign of a genuine sustainable turnaround in performance or a dead cat bounce," Jones commented. "As we move into the final quarter registration levels remain high, with the expectation that this will continue through the remainder of the year. Getting profits moving in the right direction is the challenge for all."

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