The average UK motor retailer made a profit of £5,000 in April a “marginal improvement” on last year, according to dealer profitability specialist ASE.
It said the result represented a “good return” given the reduction in tactical activity and reduced overall new car registration levels.
“With new car volumes remaining under pressure as a result of the reduced general supply push of vehicles into the UK, used car profits continue to pick up the slack.
“It was pleasing to see the used car return on investment bounce back from the dip below 80% at the March month-end. Whilst there remains significant scope for improvement this ratio reflects the strength of used car performance,” said ASE chairman Mike Jones.
“In the March results I noted that the average retailer significantly increased their stock investment. Whilst this is not unusual for March, with an influx of part exchange vehicles and some tactical registrations, it was pleasing to see a reduction in April back to more normal levels. Margins remain under pressure as a result of availability challenges, however overall results remain strong.
“It looks like the pattern is set for the remainder of 2019, with new car registrations falling slightly compared to the prior year. Diesels will continue their decline and there seems nothing on the economic or political horizon which will lead to an increase in the brands’ desires to sell cars in the UK raising the supply-push.
Jones said dealers will be looking to used car sales and aftersales for profits with new car sales in decline.
He said those dealers “heavily exposed” to brands scaling back their volume aspirations, the year will be challenging.