A study by AutoProtect claims dealers are missing out on £591m in service revenue a year. The claim comes as dealers are increasingly facing a squeeze on profit margins.
The industry has faced a flurry of recent surveys that highlight the pressures dealers face. A survey by CAP showed 56% of dealers said margins had been squeezed in July compared to June, and ASE said the return on sales percentage remains under pressure, given the increases in turnover.
AutoProtect’s analysis looked at the service revenue missed by not offering consumers service plans. Dealers miss out on revenue from both labour and parts. While commissions help to keep service and sales staff motivated.
An average dealer is missing out on additional revenue of £62,690 a year per site. Dealers benefit from incremental revenue as the figure is multiplied over the life of a three year service plan.
Commenting on the findings Jo Selby, National Sales Manager for AutoProtect Foresight Service Plan said:
Despite the strong performance of new car sales, dealers are continuing to face pressure on profit margins. This study underlines the need to approach after sales revenue in a structured way.
We know that service plans can help build closer and lasting relationships with customers that help to drive revenue across the business.
AutoProtect entered the service plan market earlier this year with the Foresight Service Plan. It says dealers benefit from a greater share of the aftersales market and guarantees an increased revenue. It is designed to increase re-sale and F&I opportunities through more frequent contact with the customer.
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