UK Motor Retail Profitability
Statistics – December 2016
Solid December result sees average UK Motor
Retailer close with profit for the year of £178,000
KEY Ratio
Net Profit as %
Sales
Overhead
Absorption
Used: New Sales
Vehicle Sales
Expenses as %
Gross
Sales per Sales
Executive
Used Vehicle
Stockturn (days)
Return on Used
Car Investment
Overall Labour
Efficiency
Service Gross
Profit % on Labour
Service Expenses
as % Gross
Hours per Retail
Job Card
Parts Gross Profit
%
Parts Expenses as
% Gross
Parts Stockturn
Year
Ended
Dec
2016
Year
Ended
Dec
2015
Bench
-mark
1.08%
1.22%
3.0%
53.3%
53.9%
80%
1.08:1
0.92:1
1.5:1
66.0%
64.9%
50%
176
183
150
57.9
54.6
45
77.8%
74.2%
100%
83.5%
82.7%
100%
75.7%
75.6%
75%
60.3%
59.5%
40%
1.54
1.60
2.5
23.5%
22.5%
22%
41.3%
44.0%
40%
7.99
7.79
8.0
2016 may well go down in history as a highpoint in UK
vehicle registrations however it failed to live up to 2015 in
terms of average dealer profitability. This was not a
surprise given the reaction of the manufacturers to several
years of under-calling the size of the market when they set
dealer targets for 2016. This resulted in dealers working
harder for less with turnover going up and profits falling.
The average dealer finished the year with a profit of
£178,000 per site, down nearly £20,000 on the figure at the
end of the prior year. Retailers did, however, outperform
the prior year in the month of December, reflecting the
increasing reliance on bonuses for hitting overall targets.
The decline in profitability was principally down to a fall in
vehicle sales & department profits, as a result of increased
targets squeezing margins and hitting average profit per
units. There was good news in aftersales, with increased
service contribution, however this was not sufficient to
maintain overhead absorption levels in the face of
increased operating expenses from ever-larger facilities.
2016 saw the continued evolution of the retailing model in
the UK, with new vehicle sales falling 10%, being replaced
by increased used vehicle sales. Dealers increasingly self
registered units to hit targets and retailed these cars as
used vehicles. Whilst there is a danger of the system
becoming clogged negatively impacting residual values,
the process was well managed throughout the year as
reflected by the strong used car return on investment
results. Further focus needs to be placed on this in 2017,
with a reduction in the days in stock being desirable.
ASE plc and ASE Audit LLP pride themselves on delivering the highest quality advice and
service to the motor industry. With significant industry experience at all levels the business is
now widely recognised as not only the Motor Trade's No.1 professional services provider but
also a trusted partner in driving profitability. ASE plc collect in excess of 10,000 composite
submissions on a monthly basis across the world, whilst ASE Audit LLP offers professional
advisory services to over 320 privately owned UK motor businesses.
The ASE Key Ratios are a simple way to benchmark performance and quickly assess the
strengths and weaknesses of a motor retail dealer.
Contact
Mike Jones
BSc FCA
ASE Chairman
Tel: +44 (0) 161 493 1930
Driving profitability across the global motor industry
www.ase-global.com
© ASE plc 2017