Profits down for car dealers

Posted on April 22nd, 2015 by Rob Marshall

profitAs politicians canvass the country, we may have become sanitised to smoke-and-mirrors being wielded, this close to a general election. During the process, we might even hear figures from the Society of Motor Manufacturers and Traders being quoted, which paint the picture of a healthy British motor industry, experiencing double-digit growth. Yet, this appears not to be entirely accurate. New car registrations might be up but, according to AM magazine, UK motor dealers’ profits are tumbling.

According to the title, the average motor dealer made a loss of £59 in the first month of 2015, compared to a profit of over £9,000 for January 2014. Dealer profitability expert, ASE, has voiced its concerns over the volume of self-registered cars, where new vehicles are registered by either manufacturer, importer, or dealer, prior to being sold. This exercise ‘massages’ the official sales figures (which takes into account the numbers of cars registered only, not sold) and seems to make the market appear to be healthier than it really is. However, it is clear that dealers are struggling to shift the pre-registered stock.

“New vehicle sales levels were marginally down on the prior year in the month. Given that the official registration statistics for January showed a growth of 6.7% on January 2014, we can see tangible evidence of an increase in self-registered vehicles now coming through the figures,” said Mike Jones ASE chairman, who continued:

“A key indicator to 2015’s financial results will be the performance in the pivotal first quarter. Whilst we will produce an increased level of registrations it looks like this will be through fleet and self-registrations and therefore at the expense of profit.”