Profits and a warning
August 26th, 2010 by Richard Aucock
CAR dealers are enjoying a continuation of record profitability but are warned not to be complacent.
ASE has looked at car dealer profitability stats, and discovered first half 2010 net profit averages at 1.4 percent.
As an average per car dealer, that equates to a profit of £76,645; that’s a £12k improvement on the same time last year.
However, this continuation of the 2009 upturn may not carry on into the second half of 2010, with a warning of demand tail off particularly affecting aftersales profits.
Although 2010 is so far beating 2009’s year-total average profit of 1.3 percent, the total year 2010 is unlikely to do so.
Not least because things always tail off in the second half of the year, say the ASE experts. This is a trend that can clearly be seen in every year since 2006; even last year, with the boost of scrappage, saw the second half end up lower than the first.
Of course, there’s no scrappage boost this year. What’s more, the shortage of used car stock has diminished too, so car dealers are once again averaging 60 days’ stock.
Aftersales are also being hit by the falling 3 year vehicle parc. ‘The average contribution made by the service department to overheads slipped from £114k in 2009 to £91k in 2010.’
The warning is therefore not to be misled by the headline stats. Yes, things are up on last year – but they’re probably not going to remain up…