November 2014 Dealer Profitability

Total Industry

Dealer profitability as measured by net profit as a percentage of sales (NP%S) was 1.3% for the average Australian dealer in November 2014, 0.5 percentage points down on the result of last month. A decrease in gross profit per new vehicle from $2,400 in October to $2,280 in November contributed to the fall in net profit.

State-by-State

New South Wales/Australian Capital Territory

The average NSW/ACT dealer NP%S was 1.5% in November which was 0.3 percentage points less than the October 2014 result. This can be attributed to a decline in gross margin per vehicle sold across the new and used vehicle departments. However, the used cars gross margin was still $100 per vehicle above the YTD value of $2,475, and $250 above the national average in November.

Queensland

QLD reported a NP%S of 1.4%, for the November month. As was the case during October, new vehicle gross per unit was $200 less at $2,490 when compared to the national average and the QLD YTD result. However, QLD continues to show a strong performance in finance & insurance (F&I). With finance penetration remaining at a rate of 36% and generating $2,914 in new finance income per contract written and $2,924 per used contract written, the average QLD dealer performed above the level of the national average.

South Australia/Northern Territory

Dealer profitability for the average SA/NT dealer was 2.6% in November – the highest performing state - with the state group continuing to be strong performers in new vehicles, grossing 8.5% of sales compared to the national average of 6.9%. South Australia was the only state to increase YTD profitability and outperform its October result of 1.7%. Interestingly however, SA/NT rely more heavily on retail service sales than other states but at the same time grosses less than other states making service less profitable - 62% in November compared to the national average of 65%.

Victoria/Tasmania

VIC/TAS had a NP%S of 0.8% in November, half of the national average, 1.8%, and its YTD value, 1.6%. A contributing factor to this fall is VIC/TAS’s reliance on fleet sales emphasised by the continual outperformance of the national average in gross profit per fleet vehicle ($227 vs. -$68 in November). On the upside, VIC/TAS dealers outperformed the national average in parts operations for the second consecutive month, with a gross margin of 23.8% to the national average of 22%. This was reflective of the contribution of ‘higher margin’ workshop parts sales to the total department sales mix. Workshop sales represented 33% of the total sales mix for the average VIC/TAS sales mix, compared to 25% of the national average.

Western Australia

NP%S for the average WA dealer was 1% in November which was a 0.3 percentage point decline on the October result. Gross margins, in every department, were above national average for November. However, fixed expenses were 54.1% of sales, 2.4% above the national average – contributing to the 0.3% fall in NP%S.

Segments

The luxury and prestige segments were jointly the most profitable segments, with a NP%S result of 1.4% in November.

All three segments; volume, prestige and luxury were down on NP%S from their YTD, September and October values.

The luxury segment had the biggest fall from the previous month – down 0.7%, whilst the volume segment was only down 0.3%. This November drop for luxury sees the YTD values for luxury and prestige equivalent at 1.9%, with the volume segment trailing at a slightly lesser value of 1.8%.

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