Car dealers' profits fall by £2,600 in 12 months

The average car dealer in the UK recorded a profit of £3,800 in July, according to new figures.

Research from ASE found that although businesses are still bringing in a profit, the margins were dropping, with the performance in July this year £2,600 lower than it was in July 2013. ASE chairman Mike Jones suggests that this could mark the end of significant growth for dealerships.

As profits drop, car dealerships will be eager to explore ways of reducing their overheads – one such approach is to ensure the company is getting the best deal possible on its motor trade insurance policy. Using expert brokers to shop around for the best deal is a good method, but it is important to remember that cost should not be the determining factor; businesses will need the right level of cover from their policy and should choose one based on their specific needs rather than opting for the cheapest deal possible.

The ASE states that the industry is likely to see a continued fall in the return on sales percentage as dealers process increased registrations whilst still making the same profit levels.

Mr Jones commented: “As expected, whilst used vehicle return on investment has increased slightly during the month, we have seen a rise in used car stand in values. This represents a combination of the disposal of low value vehicles traded in during June, the general rise in used vehicle prices and the increased volume of self registered vehicles. This is a trend we will be watching closely to ensure dealers’ stock profiles aren’t skewed too much towards self registrations.”