2018 Q3 Dealer profitability

15 January 2019

Total Industry 

Dealer profitability, as measured by net profit as a percentage of sales (NP%S), for the third quarter of 2018 was 0.3%. This left the first half of the year at 1.1%, down by -0.5% on the same period in 2017. Despite continuing growth from Fixed Operations, falling Vehicle revenues, and the corresponding fall in F&I income, meant the average dealer saw a reduction their profit in the first three quarters of 2018.

State-by-State

New South Wales/Australian Capital Territory

The average NSW/ACT dealer NP%S was 0.1% for the third quarter of 2018, which is -0.9% down from the same period in 2017. Falls in New Vehicle gross and F&I income contributed almost equally to this decline.

Queensland

The average NP%S in Queensland was 0.7% for Q3 2018, down from 1.5% in Q3 2017. Small gains in Used Vehicles and Service could not offset the falls in New Vehicle profitability, F&I and Bonus Income.

South Australia/Northern Territory

The state group of SA/NT returned NP%S of 0.6% for the period Jul - Aug 2018, however this was down -0.7% from the same period in 2017. As market activity weakened, the dealers in SA/NT were only able to find gains in their Used Vehicle departments.

Victoria/Tasmania

After seeing NP%S of 1.6% in Q1 & 1.3% in Q2 of 2018, the NP%S for dealers in Victoria & Tasmania fell to 0.3% in Q3 of 2018 - this was only down -0.2% on Q3 2017. These dealers saw a improved profitability from their Fixed Operations as well as savings in Overheads, however they were ultimately still impacted by declines in Vehicle profitability and F&I.

Western Australia

Dealers in Western Australia countered the national trend seeing their NP%S moving from 0.6% in Q3 2017 to 1.0% in Q3 2018. This was achieved through a continuing ability to find savings in Overheads, boosted by a modest improvement from the Used Vehicle department.


Segments

The dealers in the Volume segment saw profitability for Q3 2018 of 0.4%, which was down -0.9% on Q3 2017. The average dealer in the Prestige segment saw NP%S fall from 1.4% in Q3 2017 to 0.5% in Q3 2018. The dealers in the Luxury segment continue to find the market difficult, with NP%S of 0.2% in Q3 2018 compared to 0.6% in Q3 2017.

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