The only thing constant about the motor industry is change according to Deloitte Motor Industry Services reportDOWNLOAD
28 February 2012: The annual Deloitte Motor Industry Services - Australian Industry Overview 2012 report has detailed how in vehicle terms, the strength of the Australian economy helped underpin a market, which although down marginally on 2010 due to the impact of natural disasters, was strong enough to break through the million unit mark for just the fourth time.
According to Danny Rezek, Deloitte Motor Industry Services partner, this has been a year where there were mixed fortunes for global markets, both in broad economic terms and in vehicle sales, while the continued solid growth of the Australian economy has made the market here stand out, bringing the attention of many multinational car companies.
“Within this environment we saw the average dealer profitability across the whole industry remain fairly static for 2011 with a net profit as a percentage of sales (NPS) of around 2.0%. However, looking behind that number, it was interesting to see that the way dealers generated their profit had shifted during the year,” said Mr Rezek.
“Across the industry, we saw a decline in the profit from new car sales which were partly, but only partly, offset by an increase in used car profitability. Dealers’ fixed operations remained fairly stable across the full year, with perhaps a slight contraction in Parts profit and a little more contribution from Service than in 2010,” said Mr Rezek.
“If we just looked at the four traditional dealership departments, the average 2011 dealer would have been less profitable than the average 2010 dealer,” added Mr Rezek.
The report also found that another notable feature of 2011 was the different profitability of dealers in each of the three broad segments which were reviewed; the Volume Market dealer, the Prestige Market dealer and the Luxury Market dealer.
It was reported that on average, dealers operating in the Volume Market saw a fractional improvement in their results over the last 12 months, from 1.8% NPS in 2010 to 1.9% in 2011, while the Prestige Market dealers remained stable at 2.1% NPS. Perhaps the biggest surprise was the story in the Luxury Market, where the average profit of Luxury Market dealers declined from 2.1% NPS in 2010 to 1.6% in 2011.
“With average dealer profitability in 2011 remaining at 2010 levels, it was not a surprise to see that the Top 30% of dealers also returned similar levels of profit in 2011 to 2010 (3.6% NPS). In terms of the numbers coming out of their business, these top dealers were able to generate more gross income from their used departments than the average dealer,” concluded Mr Rezek.
Key highlights of the 2011 report were: