Car retailers record £19,000 average loss in ‘tough’ November

Car retailers recorded an average loss of £19,000 in a “tough” November as the average return on sales percentage dipped to 0.97%.

ASE reported that the result meant that the average dealership generated an average profit £6,000 down on the figure achieved in 2016, when sales executives made an average 161 sales, compared to 171 in November last year.

Mike Jones chairman of ASE, said that overall profitability had not weakened in-line with the fall in return on sales ratio, however. He said the decline had been the result of “increased turnover”.

He added: “Given the drop in registrations forecast for 2018 we would expect turnover levels will fall and the challenge for retailers is to maintain current profit levels.”

Retailers did sell more used cars during November, according to ASE’s data, the ratio of used:new shifting from 1.11:1 to 1.33:1 year-on-year as the return on used car investment percentage grew from 77.7% to 83.5%.

An increase in days to turn, from 56.1 to 57.6 year-on-year, suggests that retailers will have to work hard to move their stock in a climate reportedly suffering from a decline in consumer confidence.

Jones described the used car sector as the industry’s “shining star” during the second half of 2017, adding that there was currently no sign of a deterioration in used car margins.