April 2014 Dealer Profitability

Total Industry

• Dealer profitability reached 1.3% NP%S for the total industry in April – a slow start to quarter two and a significant decrease of 1.0 percentage point when compared to March.
• Despite the decrease on prior month, the result for April 2014 is 0.3 percentage points higher than the result for April 2013. However, the calendar year to date result of 1.9% (as at the end of April 2104) just falls short of the 2.0% reported last year (as at the end of April 2013).

State by state

• All state groups declined in dealer profitability for April when compared to prior month, correlating with the fall in vehicle sales across all state groups (NB: Northern Territory standalone increased in vehicle sales).

Western Australia

WA experienced the smallest decline in dealer profitability with an end result of 2.1%. WA continues to outperform the other states in F&I with higher contract dollars and new vehicle penetration. Better expense control in the back end also puts WA in front by way of selling gross (as a percentage of gross) with the average dealer retaining 64% of gross in the parts department and 63% of gross in the service department.

South Australia/Northern Territory

SA/NT dealers had the smallest percentage fall in throughput for the new vehicle department (as measured by units sold per salesperson). Also maintaining the strongest average gross amongst the states ($2,967 per new vehicle unit) led to SA/NT dealers being the strongest new vehicle operators for the month of April. The final NP%S result was 1.8% which was a decrease of 1.5 percentage points compared to March.

Queensland

The fall in NP%S for QLD dealers can be mostly attributed to the fall in throughput at the front end, as similar gross figures were reported compared to the prior month. Dealer profitably for the average dealer in the state was 1.5%.

New South Wales/Australian Capital Territory

NSW/ACT experienced 0.9 percentage point decline in dealer profitability. The fall in volume nationally is pronounced for NSW/ACT dealers with the poorer recovery of expenses, notably with higher remuneration costs in the new vehicle department. The net result was that the average NSW/ACT dealer retained the least gross in the new vehicle department with selling gross (as a percentage of gross) at 10%.

Victoria/Tasmania

NP%S for the average dealer in VIC/TAS was 0.9% with a prominent point of differentiation to the other states being the softer performance in used vehicles. VIC/TAS dealers reported an average used vehicle gross per unit figure of $1,662 which was $692 less than the industry average.

Segments

• Dealer profitability declined for all segments in April compared to the prior month.
• The luxury market saw the highest NP%S for the month of April with 1.4%. It was also the only segment to improve on the result for the same period last year. 
• The prestige market experienced the largest decline in profitability (1.1 percentage points) with a month end NP%S result of 1.3%. However, it still remains the most profitable segment with a calendar YTD result of 2.0%.
• The volume market also had an NP%S result of 1.3% and continues to report the lowest calendar year to date result amongst the segments at 1.8%.

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