Dealer profitability went to reverse in May with the average site turning in losses of £10,000 for the month.
The loss negated the gains made in April leaving retailers behind for the overall quarter.
According to dealer profitability specialist ASE, a “sizeable cause” of the drop in overall performance was attributable to a hit on used cars values.
“Whilst retailers have now managed their stock back down from the March highs to the non-quarter-end norm, this has come at a cost of margin as can be seen from the fall in overall return on investment.
“The recalibration of book values over the recent months has clearly had an impact and, now this has washed through, we can return to normal levels of profitability,” said ASE chairman Mike Jones
Jones also noted a decline in retail aftersales hours with some brands carrying out signifigant levels of warranty work.
“For the month of May the retail content of overall aftersales hours fell to 48.6%. This represents the first time it has fallen below 50% and reverses some of the recent gains we have seen.
“I will have to wait to determine whether this is an isolated blip, however the significant level of warranty work currently being undertaken for some brands is having a negative impact on retail,” he said.
Jones said not to read too much into the decline in June. While used car values did fall, some values had been too high. And the mid-quarter month is always challenging.
But he warned that dealer had forced the new car market with a “significant amount of registration activity at the month-end” to hit targets.
“I will be watching carefully how these bonuses are earned and ultimately released to see the overall impact on the year,” he said.