Latest KPI figures from ASE, the auto retail professional services provider, reveal that financial performance in the ‘average’ dealership year-to-date fell back during August and is now in line with last year. Until August, 2010 had been running ahead of 2009.

The average dealership lost nearly £13,000 during the month and the top performers only just scraped into profit. Average net profit as a percentage of sales (YTD) is now running at 1.1% but the other key ratio, overhead absorption, has dropped to 65.1%.

ASE chairman, Mike Jones, said: “August is traditionally a challenging month for the auto retail sector, coming at the height of holiday season and just prior to the registration month of September. This year proved no different.

“Dependent on the final outcome of September, we expect the poor relative performance of the second half of 2010 to continue and retailers to struggle to hang onto the significant profits made during the first half, although we have heard recent positive noises about the current order bank.”

A review of the key ratios highlights a number of areas for concern. Good results so far this year have been built on booming new vehicle sales, as evidenced through the differing overhead absorption results.

Given that the flow of new vehicle sales has dried up – and an expectation that we will fail to match 2009 performance in any of the remaining months of the year - dealerships will have to rely on aftersales to support the business.

Whilst the increase in used vehicle ROI during August is pleasing to see (up from 82% at the end of July) the performance is still way behind that of the prior year. This is principally down to the level of stock holding, with the average dealer holding nearly 25% more used stock than they did at the end of August 2009.

Making profit from these additional vehicles (or not holding them through a series of book-drops) will be a necessity if the lost new vehicle profit is to be replaced. The banks always focus on working capital management through the winter and this will be key during the last quarter of 2010.

There is also significant scope for service department improvement, with average efficiency moving closer to 80% as the months pass. Dealers are struggling to fill this lost time and, with internal sales likely to be depressed as a result of a lower level of overall vehicle sales, the industry could be looking at technician redundancies if retail sales are not increased.