Franchised motor dealers in the UK are missing out on as much as £1.5bn worth of revenue annually by failing to sell service and parts for items identified by vehicle health checks, according to training and automotive software company BTC. This equates to £330k per dealer in potential revenue or £165k potential gross profit. The results were based on live data from over 2.3 million automotive vehicle health check transactions on BTC’s national database, carried out by 825 UK dealers over the period July 2011 to July 2012.
Data was gathered using BTC’s vehicle health check software, autoVHC, which ranks jobs as “Red,” requiring immediate attention and “Amber,” needing attention in the medium term. Of the £305 million worth of Red and Amber work identified, only about a third (£108 million) was actually sold. According to BTC, the lack of effective follow up on the Red and Amber items means that dealers are allowing independents and fast-fit operators to benefit from the unsatisfied demand.
The report estimated that each dealer is missing out on additional revenue of £136 per vehicle serviced. In addition, vehicle health checks were only completed for 72% of the dealers’ service customers in the period. If these figures were extrapolated across all 4,500 franchised dealers in the UK this would represent a lost business opportunity of around £1.49bn or £330k per dealer.
Even Red items, needing urgent attention, such as illegal tyres or faulty brakes were only being repaired by the dealer in 49% of cases, while Amber items were only sold in 18% of the available opportunities presented by the autoVHC process, with customers who had previously visited the dealer.
Herbert Lonsdale managing director BTC Solutions commented, “Even where there is a compelling case on the grounds of safety or legal compliance, dealers are not able to convince half of their customers to have the work done on site, effectively handing over franchised dealer expertise and revenue to third parties, like independent repairers or the rapid fit sector. Either we have the wrong profile of people in the service advisor role or we need to start training current staff in how to maximise the huge sales opportunity from Red business alone.
“With the Amber items there is a need to communicate better with customers and build the relationship so that they understand the value of having the work done at the time of the health check or that they are more likely to return when the need for repair becomes more pressing.”