A £9,900 improvement in April profits for car dealers could be an indicator of “the real prospect of a period of comparative prosperity”, according to ASE.
The average UK motor retailer reflected the upturn in the new vehicle market and the continued strength in used car retailing to produce a strong performance for the month of April, ASE chairman Mike Jones said in his monthly report on dealer profitability.
Jones said: “Whilst it is certainly too soon to celebrate April as evidence of a permanent return to improving retailer profitability, it was 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.”
Used cars and aftersales performance were highlighted as the key drivers to the uplift in dealer profitability.
ASE’s report said that retailers’ used car departments had delivered an additional £10,000 gross profit in the month, through 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, it said.
Aftersales profits were up £6,000, meanwhile.
ASE said that this was driven by an increase in hours sold which in turn drove up labour sales income.