A small increase in dealer profitability reported …..

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The average year on year profitability of car dealers rose marginally in July, according to the latest analysis from ASE, the dealer management specialist.

Return on sales increased from 0.9% in July 2011 to 1.1%, although overhead absorption dropped from 61.6% to 59.2%.

ASE said average performance for the month tracked trends seen in Q2.

“Whilst the marketplace is undoubtedly tough, with retail registrations and retail hours hard to come by, the motor trade appears to be weathering the storm well,” said Mike Jones, ASE’s chairman.

“In a month which over recent years has become a constant loss-maker the average dealer made a small profit. Whilst the total turnaround is less than £10,000 it is important to see dealers making profits in the non-vehicle registration months.”

ASE noted dealers saw improved returns from their used car operations over the course of the month with average used vehicle gross margin which is now 8% up on 2011.

“As we pass through the September registration month it will be interesting to see whether self-registration activity impacts the average used vehicle stock position,” said Jones.

“Average stand-in values have been dropping as we moved through the summer, with dealers both reacting to the market and selling vehicles registered during previous campaigns. Given current market activity we would expect the average to rise again at the end of September.”