2018 Q4 Dealer profitability

15 April 2019

Total Industry 

Dealer profitability, as measured by net profit as a percentage of sales (NP%S), for the fourth quarter of 2018 was 0.5%. After NP%S of 1.5% in the first half of the year, this left the average dealer in Australia with a NP%S of 0.9% for 2018, down by -0.7% on 2017. Growth in revenue from Parts (+6%) and Service (+3%) could not offset a 7% reduction in New Vehicle revenue coupled with an 8% reduction in revenue from Used Vehicles. Lower vehicle volumes also had flow on impacts to F&I and Bonus Income which left net profit down for the year.

State-by-State

New South Wales/Australian Capital Territory

The average NSW/ACT dealer NP%S was 0.7% for the full year, which is -0.9% down on 2017. Falls in New Vehicle gross and F&I income contributed almost equally to this decline.

Queensland

The average NP%S in Queensland was 1.3% for 2018. Small gains in 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 finished 2018 with NP%S of 1.4% for the year, however this was down -0.7% on the prior year. As the new vehicle market weakened, the dealers in SA/NT were only able to find gains in their Used Vehicle departments.

Victoria/Tasmania

The NP%S for dealers in Victoria & Tasmania fell to 0.9% for 2018 - this was only down -0.2% on 2017. These dealers did see improved profitability from their Fixed Operations as well as savings in Overheads, however they were ultimately still impacted by the significant declines in Vehicle profitability and F&I.

Western Australia

Dealers in Western Australia saw NP%S of 1.0% for 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 Q4 2018 of 0.4%, which was down -1.3% on Q4 2017, and left them with NP%S of 1.0% for the calendar year. The average dealer in the Prestige segment saw NP%S fall from 1.8% in 2017 to 1.2% in 2018. The dealers in the Luxury segment continued to find the market difficult, with NP%S of 0.8% for the full year compared to 1.2% in 2017.

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