Dealers’ used car performance remains “key” following a marginal improvement in profits for July, according to dealer profitability specialist ASE.
Last year dealers saw losses of £1,600 for July but July 2019 saw a swing of just under £2,000 to bring dealers into profit.
“The profitability improvement was once again driving by the contribution from the used car department.
Levels of stock remain high, however, which has seen the return on investment remain below 80% for the past 5 months.
“An improvement in stock turn would be desirable, which would both improve the return and reduce any residual value risk,” said ASE chairman Mike Jones.
This represents a steady start to the second half of the year, particularly given the uncertainty on the horizon
“With the RDE deadline, Brexit plus a faltering economy, the industry is likely to have plenty of challenges in the second half of 2019.
“There are few signs that retailers will be able to catch-up the year-on-year underperformance in profit we saw in H1, however we are expecting H2 to show a rosier picture, in terms of both comparative profitability and registrations
ASE flagged up concerns for H2
- With the impending RDE deadline hitting in September ASE is monitoring closely self registration activity and overall used car stock levels.
- Average stock investment remains at a historically high level
- Managing used car stockturn will be a focus for H2