February 2014 Dealer Profitability

Marionne Sooriakumar | 2 April 2014

Total Industry

  • Dealer profitability reached 1.7% for the total industry in February, with this result being a 0.5 percentage point decrease on the strong start experienced in January.
  • The NP%S result for February in 2014 was also lower than the same month in 2013 and 2012 – where the average dealer saw 1.9% and 1.8% respectively in these years. Note that the average dealer in the industry will need to achieve 2.0% in March 2014 for quarter one in 2014 to close at the same level as it did in 2013. 

 

State by State

WA

WA was the only state to experience an uplift in dealer profitability, with the end NP%S result for the state at 2.6%. While new vehicle volume and grosses were strong, total expenses across the dealership represented 126% of traditional gross (i.e. new, used, parts and service) with this figure being the highest amongst the states. However, WA maintained profitable due to strong performance in F&I with the average dealer earning $3,681 per new contract and $4,069 per used contract.

QLD

The average QLD dealer achieved 1.9% NP%S in February continuing to maintain itself as one of the more profitable states. The average dealer in QLD had also high costs with total expenses across the dealership representing 121% of traditional gross. Similar to WA, QLD dealers remained profitable through F&I with new finance penetration strongest in this state at 35%.

VIC/TAS

The average dealer in VIC/TAS saw NP%S of 1.5% in February, experiencing increased throughput in both new and used vehicles compared to January. However, the gross side of the equation was lower as the average dealer generated $2,379 per new vehicle retailed and $1,458 per used vehicle retailed ($145 and $838 less than the national average respectively). Despite this, expenses in the vehicle sales departments were lowest in this state, leaving them as the third most profitable state in February.

NSW/ACT

NSW/ACT dealers saw NP%S of 1.5% with pressure continuing for the state to remain profitable in vehicle sales. The total gross pool for the average dealership in NSW/ACT was smaller in February, largely due to less throughput with 0.9 less new vehicle units sold per sales person compared to January.

SA/NT

SA/NT experienced the largest decline in dealer profitability on prior month with an end NP%S result of 1.1%. This decline is largely attributable to a decrease in service department profitability, with selling gross as a percentage of gross falling by 4 percentage points to be 54% in February.

 

Segments

  • Dealer profitability declined for all segments in February compared to the prior month
  • The volume market experienced the largest decline (0.7 percentage points) with a month end result of 1.6%. It is the only segment with a YTD NP%S result below the total industry YTD figure of 2.0%.
  • The prestige market continues its trend from 2013 to be the most profitable segment, with the highest result in February and YTD (1.9% and 2.1% respectively).
  • The luxury market saw NP%S of 1.8% and is the only segment with its result in February 2014 not below the same month last year.

For the full presentation please click the graph below

February profitability chart

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