Average car dealership saw profits rise 189.7% in September, ASE reports

The average UK car retailer saw monthly profit soar 189.7% year-on-year in what the SMMT described as “a hopelessly disappointing September,” according to ASE.

The reported automotive consultancy, compiled by former ASE chairman Mike Jones, revealed that the average retailer made a profit of £ 168,000 (2020: £ 58,000) in the month, despite the shortages new and used vehicles.

“This continues the phenomenal profitability we’ve seen since March and pushed the 12-month rolling average sales return to 2.36%,” Jones said.

Last month, the Society of Motor Manufacturers and Traders (SMMT) reported that franchised car dealers had the lowest total new car registrations since 1998 in a “hopelessly disappointing September” after volumes fell by 34 , 4%.

But Jones said the continued challenges of sourcing new cars have helped produce a positive trend for retailer profitability.

“While registrations fell 34.4% year over year, retailer profitability continued to grow thanks to strong margins and growth in volume used,” he said.

ASE said it has seen a stabilization in used car profit margins achieved by retailers over the past two months.

As prices continue to rise, retailers have maintained their margin, but if wholesale prices continue to rise in the fourth quarter, retailers will need to ensure that consumer demand remains robust at higher prices to avoid that their margins are not squeezed, he said.

AM reported earlier this week that used car wholesale values ​​remained at their second highest level on record at BCA auctions in October, despite signs of a ‘frenetic’ market ‘easing’ of 2021 in the last stages of the month.

Auto Trader said this week that an 80th straight week of increase in used car values ​​and the highest level of inflation in the UK in a decade is unlikely to dampen consumers’ appetites to buy. a new vehicle after the average value on its platform rose 26.9% to a record £ 19,766 last week.

ASE said, “With new car supply shortages expected to continue for another 12 months and franchises continuing to push their agency programs forward, retailers must continue to realize efficiency savings to reduce their bases. costs.

“Digitization offers a good opportunity to do this, but its effective implementation requires hard work. “

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