2017 Q3 Dealer profitability
Balram Dabhade | 16 November 2017
The dealer profitability, as measured by net profit as a percentage of sales (NP%S), for the third quarter of 2017 was recorded at 1.0%, which is 0.1% lower than the third quarter of 2016.
While overall dealership revenue grew by 15% YoY, expenses also grew by 12% which kept the growth in profitability down.
New South Wales/Australian Capital Territory
The average NSW/ACT dealer NP%S was 1.0% for the period Jul - Sept 2017 which is 0.5% down from the same period in 2016. The selling expenses for the state group of NSW/ACT increased by 18% while the gross profit only increased by 10%, leading to an erosion in total dealership profit by 19%.
The NP%S for Queensland was 1.3%, with overall dealership revenue increasing by 7%. The total dealership gross also increased by 7% but an increase in expenses by 3% meant that selling gross decreased by 3% overall. The net profit in dollar terms for Queensland dealers improved by 51% this quarter over the same period in 2016.
South Australia/Northern Territory
The state group of SA/NT had the highest profitability of 1.4% for the period Jul - Sept 2017. This state group saw an increase in dealer revenue by 17%, but at the same time expenses also increased, putting the net profit under pressure compared to last year.
Dealers in Victoria & Tasmania saw the highest increase in revenue – a 20% increase YoY. While the NP%S for these dealers was at 0.6%, which is the lowest in all states across Australia, it was an improvement of 0.2 percentage points on Q3 2016.
The state of Western Australia recorded a NP%S of 1.1% this quarter which is 0.2% lower than last year. The sales revenue of this state has softened by 3% and is the only state to report lower revenue YoY. This is also the only state where the expenses have gone down by over 14%, however overall profitability (in dollar terms) for Western Australia eroded by 22% YoY.
The Volume segment has the highest profitability of 1.3% followed by the Prestige segment with a profitability of 1.2%. The Luxury segment had the lowest profitability of 0.7%.
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