- Aftersales absorption levels continue a worrying downward trend.
- Traditionally, aftersales revenues targeted absorbing (covering) 100% of a dealer’s fixed overheads. It has fallen to an average of 55.5% (Oct–March), down 5.7% on the preceding six months.
These worrying statistics published by REALtime Communications, whose highly respected data analytics relies upon real-time data from many of the UK’s franchised retailers, should concern business leaders across the franchised retailer community.
Reflecting upon the data, Richard Robinson, Chief Operating Officer from REALTime Communications, notes: “The declining trend is something we have been forecasting for many months. The loss of circa 2.1 million new car sales in the 2000–2022 period is now impacting the critical N-3 car parc for franchised aftersales activities. At the same time, the sales of low maintenance BEVs are also playing an increasing role in reducing servicing activities.”
The decline in absorption levels is joined by falling conversions of red and amber work, down 3.9% and 6.06% respectively, even though work identified in Electronic Vehicle Health Checks (eVHCs) increased. Tyres, an area many retailers have been targeting for growth, saw red work conversion fall by 6.01%.
As well as the decline in new car sales and the emergence of BEVs, an ageing car parc and the cost of living crisis are seen as critical contributors to the downturn – it’s a clear challenge that retailers must seek to address.
Robinson concludes: “To an extent, strong used car profitability has masked the challenges facing aftersales, but we can see that gross profit from used car sales has also declined. The perfect storm needs to be addressed, and arguably, any moves to any agency model by an OEM may further crystalise the need to develop strategies to reverse the trends we have identified.”