New sales power dealer profitability rise in April

Improvements in dealer profitability continued into April with the average site making a £9,000 profit, a year on year improvement of 36.4%,  according to the latest data from ASE, the dealer profitability specialist.

ASE chairman Mike Jones described this as a “creditable performance” considering the impact of the Easter bank holidays on trading and the sales dip which traditionally follows the March plate-change and end of Q1.

The average return on sales is tracking at 1.55% in the rolling year, up from 1.29% in 2013.

“The net profit return on sales percentage dropped slightly from the highpoint of March as a result of the volume of business transacted, however dealers are still adding to their bottom line result and building their service parc for the future,” he said.

ASE said the strong result is still being primarily driven by new vehicle sales with the average dealer selling an additional 48 new cars and 41 used cars compared to the prior rolling 12 month period.

Jones said overhead absorption continues to improve across the sector rising from 55.6% to 57.9% in the rolling year.

“The overhead absorption ratio has continued its slow and steady improvement, albeit still at a historically low figure. This is very pleasing to see with a steady reduction in idle time and increased labour efficiency. Whilst there remains significant spare capacity this is slowly being eroded driving aftersales profitability,” he said.

Source: ASE