Research by valeting and preparation firm Autoclenz has revealed that dealers who valet vehicles themselves pay up to 55% more than companies which outsource the service to a specialist. It suggests large dealerships could save £100,000 a year by outsourcing.
Managing director Grahame Rummery said many dealers had outsourced valeting, and more were now going down this route because of legislative pressure and the potential to save costs.
“Outsourcing offers flexibility – dealers pay per unit, rather than paying for an extra full-time employee and all the associated costs,” he said.
“Back-up support is also important. Dealerships are focused on being lean operations, so if there is an influx of volume, they may be alright on the administrative side, but physically they will struggle.
“And then there is the health and safety responsibilities for cleaning products and disposal of chemicals, which outsource specialists take care of.”
Mr Rummery said dealers had been forced to look at their cost base due to pressures on margins affecting every department. They were searching for ways to produce the same product and service but make more money.
“Quality preparation can add a couple of hundred pounds to the price of a used car,” he said. “Customer expectations are much higher than a decade ago.
“Dealers accept that by making a small investment on valeting, they can enjoy greater returns at the end of the day.”
Rival firm Direct Valeting, which underwent a management buy-out last September, said valeting and preparation were causing dealers a major headache in terms of rising costs and administration.
Chairman Chris Trotman said: “Dealers are finding it more and more difficult to control and manage valeting staff in the face of rising customer expectations. Valeting staff are needed in all departments – servicing, LCVs, bodyshops, car hire – which is hard to control.
“Our system can save dealers thousands of pounds, while enhancing quality and improving management control.”
Direct Valeting is looking to expand in the South and North-east, through organic growth, to give it national coverage. “The motor industry consists of national chains – we need to match this coverage with our service level,” said Mr Trotman.
Consolidation in the marketplace has fuelled the move towards greater outsourcing by retailers.
Mr Rummery said: “The bigger dealerships get, the less they want to get involved in areas like valeting – their focus is selling cars.”
He believes there is “nothing to stop” Autoclenz from doubling its client base, currently just under 500 bodyshops.
This year the company launched a one-stop shop facilities management service to allow dealers to concentrate on their core activity of car retailing.
“This area of the business offers great potential for growth – most dealerships are not built to support the volume that they need in today's environment,” said Mr Rummery.
“We can take the pressure off busy dealer principals and leave them free to concentrate on selling cars.”
The service includes stock management and vehicle movement, office cleaning and administration assistance. It even extends to a permanent on-site handyman.
Autoclenz has also launched Additions, a complete range of vehicle enhancement services, including smart repairs, paint protection and towbar fittings.
“It enhances dealers' core business and in some cases is becoming a profit centre in its own right,” said Mr Rummery.
Autoclenz last month opened a 7,000 sq. ft. preparation centre in Exeter for the trade. It offers collection/ delivery, preparation, valeting, PDI and smart repairs, delivering cars to the dealership in ready to retail condition.
The company has smaller outlets – Derby, Glasgow and south Wales – but is confident that its latest centre will provide a template for future expansion in the UK.
The operation, presently working to 70% capacity, can valet 20 vehicles at any one time. It has a 120-car throughput potential over an eight-hour working day, but is geared up for 24-hour operation if required.