KPI of the month – vehicles sales expenses as a % of gross

The national average ‘vehicle sales expenses as a percentage of gross profit’ KPI has started creeping up again, according to figures issued by motor trade accountants ASE.

In May last year it was running at 65.5% but now it has climbed to 71.9% – against an industry benchmark of 50% maximum.

ASE’s tax director Paul Brown believes that could be due to falling gross profit margins rather than to rising costs, but warns that retailers will need to stay focused on expenses throughout the rest of this year – particularly as good used car stock becomes harder to find and auction prices increase.

The main danger is that if used car prices level off or go into reverse, and consumer demand slackens off, some retailers will be left with high-priced forecourt stock that proves difficult to sell.

ASE also reports that the national average used:new sales ratio has increased from 0.9:1 a year ago to 1.4:1 in May (the benchmark is 1.5:1 minimum), and that annualised used car profit return on stock fell to 102.1% in May (benchmark 100%) from a high of 136.0% in Marc. However that is still considerably higher than the 59.9% recorded last May.

Understanding KPIs

Total monthly vehicle sales expenses
——————————————— x 100
Total monthly gross profit