A strong used car performance helped the average UK motor retailer deliver a strong performance for the month of April.
Dealers saw an average £9,900 increase in profits compared to April 2017, which saw profits of just £600, which was hit by a combination of the Easter holiday falling in April in 2017 and a small pull-forward of new vehicle sales into March as a result of the changes to the VED regulations were behind the fall.
The April 2018 performance is more in line with that of April 2016, which saw average profits of £8,000.
The used car department, which delivered an additional £10,000 gross profit in the month. This was a combination of increased volumes and a slight improvement in gross profit per unit.
“Whilst stock levels remain historically slightly high, retailers did a good job of destocking in April and I would expect this to continue as we move through Q2,” said ASE chairman Mike Jones.
Aftersales also had a strong month in April, delivering £6,000 more profit in the month than in the prior year.
“This was driven by an increase in hours sold which in turn drove up labour sales income. Whilst there was good retail labour growth amongst some franchises, some are very reliant on warranty income,” said Jones
Jones said the outlook was uncertain but there were some positive signs
“Whilst it is certainly too soon to celebrate April as evidence of a permanent return to improving retailer profitability, it was certainly nice to see an out-performance compared to the prior year after a year of watching declining profits.
“May registration levels also showed signs of growth, therefore there could be the real prospect of a period of comparative prosperity. I expect to see continued growth in used car sales and service hours which should deliver a positive boost in what has historically been a poor performing month.