2018 Q1 Dealer profitability

15 May 2018

Total Industry 

The dealer profitability, as measured by net profit as a percentage of sales (NP%S), for the first quarter of 2018 was 1.6%. This was in line with the same period in 2017, and up by +0.2% on the final quarter of 2017. Modest increases in dealership revenue and gross profit were offset by falls in F&I income and increased expenses across the business as a whole to leave the bottom line unchanged.

State-by-State

New South Wales/Australian Capital Territory

The average NSW/ACT dealer NP%S was 1.5% for the period Jan - Mar 2018 which is -0.1% down from the same period in 2017. Falls in F&I income coupled with increases in Overheads contributed to this decline.

Queensland

The average NP%S in Queensland was 1.7% for Q1 2018, down from 2.0% in Q1 2017. Despite a +6% increase in top line revenue, Queensland dealers were impacted by declines in F&I and higher expenses across their dealerships.

South Australia/Northern Territory

The state group of SA/NT continues to show the strongest NP%S in the country, returning 2.0% for the first quarter of 2018. However this was down -0.5% from the same period in 2017. In addition to seeing declines in F&I and increased expenses, SA/NT dealers also saw a fall in gross profit as their Fixed Operations performance softened.

Victoria/Tasmania

Dealers in Victoria & Tasmania lifted their NP%S from 1.1% in Q1 2017 to 1.6% in Q1 2018. These dealers saw a more modest fall in F&I income and only minimal increases in expenses. This meant that higher Other Income and Bonuses had a positive impact on their bottom line.

Western Australia

The NP%S for Western Australia in Q1 2018 also lifted from Q1 2017 - moving from 1.5% to 1.8%. In this market, dealers were able to more than offset declining revenues and gross profit by reducing costs across the business.


Segments

The dealers in the Volume segment had the highest profitability of Q1 2018 (1.8%), which was down -0.1% on Q1 2017. The average Prestige segment dealer saw NP%S fall from 1.8% in Q1 2017 to 1.6% in Q1 2018. The dealers in the Luxury segment continue to find the market tight, but the NP%S of 1.3% they delivered in Q1 2018 was an improvement of +0.1% on the same period in 2017.

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