Dealers miss out on £450m
BTC’s annual autoVHC report highlights lost sales opportunities for franchised dealers and customer safety concerns.
Franchised dealers are missing out on more than £450m worth of revenue by failing to sell Red work identified during customer vehicle health checks, new data from leading automotive industry consultancy BTC has revealed.
Across the UK’s 4,900-strong franchised dealer network, this equates to £92,145 of lost sales per dealer, raising concerns that independents and rapid-fit operators are being allowed to benefit from missed sales opportunities.
The data was gathered using autoVHC, BTC’s electronic vehicle health check system, which recorded information from a sample of 500 UK dealers in 2014. It revealed the dealers sold an average of just 56% of urgent Red work – such as severely worn or illegal tyres and faulty brakes. This equated to a total of £46m of missed sales across the sample. On a national scale this could mean unsold Red work represents a lost business opportunity of £451.5m per year.
BTC chief executive Guy Allman said, ‘Dealers are letting too much urgently required work slip away. Red work is identified as faults that, if not dealt with, render the vehicle un-roadworthy. So when a customer decides not to have it done at a dealer they’re usually looking at having it carried out by an independent outfit.
‘Once customers make this decision it’s hard for dealers to win them back. So it’s not just a case of losing the immediate sale, it also means missing out on future business. There is also a duty of care aspect. If the customer doesn’t have the work done there and then, they’re basically being allowed to drive off the forecourt in a car that is in a dangerous condition.’
In addition, the data also revealed that 22% of customers at the sampled dealers did not have vehicle health checks completed as part of their service.
Work sold once a health check has been carried out stood at an average of £69.70 in 2014, meaning failure to complete checks equated to a further £24.4m of lost sales across the 500 dealers. This could represent an additional £239m of annual missed sales opportunities nationwide.
A total of £84.6m worth of Amber work was also identified in 2014 but just 16.5% of this was converted.
In contrast, work logged and successfully sold using the autoVHC system by the sampled dealers represented 40% of their total service revenues in 2014. Based on an average margin of 40%, this represents a gross profit among the sampled dealers of £28.6m, or £57,250 per dealer.
Guy added, ‘Clearly there are major sales opportunities to be gained from carrying out vehicle health checks. But service departments must focus on improving sales skills if they are to maximise revenues and underpin lifetime customer value.
‘It is also important that dealers are able to sell Amber work at a later date. Since the vast majority (85.5%) is not carried out on the day, it is vital that dealers have an effective follow up process in place to secure the future revenue.’