Dealership profitability down in November

Car dealers made an average loss of almost £13,000 during November 2016, according to new figures.

ASE, which collects and analyses market data, said that most dealerships made a profit of less than £175,000 during the last 12 months, a fall of £34,000 on last year. However, it found that average turnover during 2016 was around the same levels as the previous year’s.

Although the financial figures are disappointing, the report also pointed to strong prices and sustained demand for used vehicles. If you are aiming to boost your profits by changing the type of vehicle you deal in, be sure to check you have the correct level of motor trade insurance to cover any alterations in your business model.

The data from ASE was “not as bad as forecast”, according to the company’s chairman Mike Jones.

He told AM Online: “Expectations were low as we have seen both the peaks and troughs in performance deepen throughout 2016, however this movement is relatively minor.”

The report found that although there was a reduction in new car sales during November, there was a small increase in used vehicle sales. Over the 12 month period, second hand motor sales were flat and profitability remained ‘solid’. ASE found the same trend continuing into the New Year with good prices being achieved at used car auctions.

Despite an increase in new car registrations, Mr Jones said sales of new cars did not hit the same levels as 2015.

He added: “This provides tangible evidence of the change in the model we have seen accelerate over the past 12 months with dealers registering the cars themselves and then retailing them as delivery mileage used cars.”