Thursday, 23 February 2012

The average franchised dealership made an £84,000 profit in 2011, according to the latest full year data from ASE, the dealer business management specialist. The amount equates to a 0.8% return on sales for the year.

The profit among the UK’s top performing sites averaged £400,000 but ASE warned that many sites representing mainstream brands were hovering around breakeven as the gap between premium and volume profitability widens.

ASE chairman Mike Jones acknowledged the 2011 result was £35,000 less than 2010, on a 1.3 per cent return, but praised dealers for staying in the black.

“This is a superb result given the current economic climate,” he said.

However, the year-end figures show a fall in overhead absorption from 63.3 per cent to 58.5 per cent.

“The trend in overhead absorption remains concerning. Absorption on average is now well below 60 per cent which puts massive pressure on used vehicle performance with the low current volume and profitability within new vehicle sales,” he said.

The results for the year show an increase in the ratio of used to new cars sold, up from 1:1 to 1.2:1, and a fall in used stock days from 61 to 58. However, sales per salesman fell from 163 to 158.

ASE said the results reveal a significant divergence in performance between brands with mainstream marques performing badly.

“A small number of brands are currently producing exceptional results with all of their dealers making significant profits. Whilst there has been a slip in the return earned by the top 10 per cent, from 4.8 to 4.5 per cent compared with 2010, the top dealers in 2011 are significantly larger and are averaging £400,000 profit per site.

“This contrasts massively with a number of predominantly volume  brands where the average is hovering around breakeven. This is clearly a concern for all and we are likely to see a downsizing of these networks as we move towards block exemption,” he said.

The figures also show dealers achieving good aftersales returns with figures for labour and workshop efficiencies, hours per job card and parts profits on a par with 2010.