Average franchised car dealer year-on-year profitability up slightly in January

Average franchised car dealer profitability in January was ahead of last year to £5,000.

In January 2017 car dealers made an average return of £2,600, according to performance specialist ASE.

“Looking at the figures in more detail,” said ASE chairman Mike Jones (pictured), “we can see an increase in the variance in performance between brands.

“This reflects the results exhibited in the registration statistics, with some franchises suffering significant drops in sales, which is naturally feeding through to reduced profitability. This is expected to continue as we go through the year.

Used cars

The used car return on investment remains “healthy” at 84.7% .

“We saw a slight reduction in the average margin in January. “However this was offset by an improvement in stockturn.

“The used to new ratio continued to grow, a trend which I expect to see continue as we see increasing used car sales whilst new sales reduce slightly.”

First quarter outlook

The new vehicle registration statistics for January and February were both better than expected, showing slight declines on the prior year.

“Given the strength of the first quarter of 2017 I had been fearing a larger drop off, and we will have to wait and see whether this is the case in March. It is also good to see the profitability performance for January, slightly beating the prior year comparative.

“It is, however, far too soon to draw conclusions about the overall quarter as this will depend on performance in March and the “Beast from the East” will certainly not have helped us compete with what was a phenomenally profitable month in 2017.”

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