The average UK franchised auto retailer made a trading loss of £15,000 in August, which is always one of the toughest trading months of the year, according to the latest figures from professional services provider ASE.

The figures are not quite as bad as had been expected – in the same month last year the average loss was £13,000 – and the annual figures for the eight months to August now see an average return on sales of 0.6%. The equivalent figure in 2010 was 1.1%.

Mike Jones, executive chairman of ASE said falling overhead absorption (now averaging 60.8%) and lower levels of overall vehicle sales were contributing equally to the shortfall compared to last year.

“Overhead absorption has been slipping back month-on-month with dealers not being able to increase retail hours to offset declining internal and warranty demands,” he said.

“In vehicle sales the average retailer has matched their 2010 used vehicle volumes, albeit with a £60 drop in average margin. New vehicle volumes are, as expected, significantly down and this combination has not been matched by a fall in costs.”

Mr Jones said vehicle sales expenses as a percentage of gross profit were now tipping over 70%.

The full year outcome will be heavily dependent of trading figures for September, which created a £44,000 profit for the average retailer last year, according to ASE. However, trading in the final quarter of 2010 only produced break-even.

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