The new year is expected to see a war on costs as dealers strive to maintain profitability in a weak new car market.
That’s the view of Mike Jones, chairman of ASE, who said overheads had risen at dealerships during 2019.
“Over the past year we have seen an increase in general overheads of 3%. As we move into 2020 I expect to see a real war on costs taking place.
“The new car market is not forecast to improve, therefore retailers will need to manage cost increases to compensate, whilst continuing the focus on used cars and aftersales,” he said.
ASE said the average UK retailer made a profit of £1,500 in October, compared to a profit of £6,000 in the prior year. Bu the 2018 result was bolstered by the unwinding of some of the WLTP issues from that year.
Jones said 2019’s performance looks more favourable when set against the result for 2017, which was an average loss of £1,400.
“At the end of October overall retailer profitability for the previous 12 months had fallen 9% on the prior year, reflecting the challenges we have seen, particularly in the new car market. It now looks likely that overall profitability for the year will settle at this level for the year,
2Used car stock remained at historically high levels during October. The growth in the used to new ratio shows retailers switching their focus to used cars and stockturn days improved slightly in the month. This remains, however, an area of concern, with retailers needing to continue the current focus on improving stockturn,” he said.