Dealer groups that have the most impressive levels of profitability so far in 2012 are all investing time and effort in maximising aftersales revenues, says The Warranty Group.
Sales and marketing director Ian Simpson said that there was a direct link between those operations that were performing best and their ability to sell warranties, service plans and other added value products.
He explained: “Because of our footprint across the industry, we are aware of the kind of activity going on at most dealer groups even if we do not work with them and can see that those working hardest at maximising aftersales revenues are those with the best overall financial performance.
“At a time when new car sales remain sluggish and return low margins, and used car sales are being hampered by a shortage of high quality stock, all facets of aftersales become a crucial source of profitability.”
Simpson said that many dealer groups had completely overhauled their attitude to warranties, service plans and other added value products and were now enjoying very high levels of sales penetration.
“Clearly, many customers are feeling the financial pinch and are open to the idea of fixed cost motoring with minimised financial risk. Products such as service plans and warranties are very answering a customer need at the moment and with the right staff training and reward infrastructure in place, dealers can achieve very impressive sales levels.
“Importantly, products such as these create an ongoing aftersales link between dealer and customer. A customer who has bought a service plan is one who is going to come back to you time and again, and the same is true of warranties if you move to capture warranty claims.”
Simpson added that The Warranty Group saw added value products such as alloy wheel insurance as the next potential avenue for dealers.
He said: “We have been working on a new range of products for some time. We believe that insurance covering, for example, tyre and alloy wheel damage are very answering the same kind of fixed cost motoring need as service plans and warranties, and it is probable that customer interest in this kind of offering will potentially be very high.”