Overall auto retail profitability took a step backwards during May, according to figures from the leading industry services provider ASE which are reported in the latest Auto Retail Manager.

The average motor retailer made a loss of £9,500 during May to end the month showing a year‐to‐date profit of £61,000. This is 50% greater than for the same period in 2009 but, for the first time, retailer dealers failed to beat the monthly result reported in the prior year.

ASE chairman, Mike Jones, says this is not surprising given that the scrappage scheme was just starting to take off in May 2009. The trend is forecast to continue for the remainder of the year, with the majority of retailers battling hard to retain the profit earned during the first quarter.

Profitability in the first five months has largely been built on a creditable new car sales performance. But the SMMT is forecasting significantly lower sales volumes in the second half of the year and retailers will therefore need to improve focus on both used cars and aftersales.

Used vehicle stockturn remains a concern at 61 days, particularly given the recent seasonal drops in the pricing guides. On current stock levels the July book movement produced a £10,000 stock adjustment for average dealer.

Service profitability remains disappointing, with the average retailer £18,000 down on 2009’s result. This can be seen in the drop in both efficiency and gross profit.

Source: Auto Retail Network