Dealers are failing to mitigate the impact of nose-diving new vehicle sales by exploiting the profit opportunities provided by their workshops.

Numerous aftersales opportunities exist in the shape of service plans, extended warranties and all jobs required as a vehicle gets older. 

But the problem dealers are failing to address is the increased likelihood of customers migrating away from the dealer network into the arms of independent sector competitors to get the work done, and this is just as the vehicle reaches the age when the returns on service work become that much more attractive (between three and six years old).

The trend has been identified by aftersales consultancy Bluefin. 

AM has teamed up with Bluefin to offer dealers a workshop healthcheck enabling them to assess and measure the efficiency of their servicing and repair business against their peers.

Bluefin director John Howell said: “Car owners’ options on where they can take their car have grown considerably.

With more and more customers being internet savvy, internet searches prior to work being undertaken is widening the competitive market even further.

"Unfortunately, the underlying industry reaction has been to simply put labour rates up in an attempt to claw back the revenue in lost custom from fewer hours being sold.

"This has merely driven people further away.”

Bluefin says despite understanding that the market has become much more price conscious, average hourly labour recovery rates have still continued to rise – from about £73.50 at the end of July 2008 to £79.80 at the end of March 2009.

In the last two years, rates have risen by 15% with some brands.

Read this story in full in the 29th May 2009 issue of AM. To subscribe to AM magazine click here or call 01733 468659.

Workshops: Are you fit for business?

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