If dealerships don't pick up the aftersales opportunities posed by block exemption, they face oblivion, argues Paul Clarke, managing director of Autoconnect.
Franchised dealers and independent garages are confused over the implications of the changes to block exemption regulations that came into force in October. It is widely thought that it could take 12 months or more for the full implications to become apparent.
The automotive aftermarket has been spurred into change by these regulatory changes and the race is on to successfully adapt. But the structural changes are yet to be clearly defined and, again, we see the industry limping along having trouble getting out of first gear. Nobody seems to know what is the best way forward.
One of the most interesting aspects of the opportunities thrown up by the new legislation on block exemption may be not what the market takes advantage of, but what it misses out on.
Garage regulation has been a hot topic ever since the Department of Trade and Industry report. What better way to give the customer regulation than through multi-franchise authorisation policed by the vehicle manufacturers?
The authorised garage will be expected to achieve high standards and must have the technical abilities and tools of the standard franchised workshop
Open and trusted
An opportunity exists within block exemption to make the service and repair aftermarket open and trusted. Whether the players within the market are innovative enough and flexible enough to grasp the opportunities has yet to be seen.
For example, with service intervals stretching further and further apart, the chances of incremental business from wear and tear replacements such as tyres and brakes will increasingly become the feed trough of the fast-fit or autocentre. But, coupled with the competition from aggressive
post-block exemption aftermarket competition, the dealership aftersales sector could ultimately face oblivion.
Autoconnect recently examined a sample of 40 dealerships out of the large number using their vehicle health check process. The average incremental sale per invoice for safety-related work found while completing the job, was £47.63.
For a dealership completing the average 84 retail jobs per week this represents additional revenue of over £200,000 per year.
This figure only represents the safety-related work needed at the time of the visit for which the dealership has a duty of care to report.
No structured process
What about the work needed before the next visit – the tyres, battery or brakes that will need replacement before the next, well-extended, service interval?
The majority of dealerships do not have a structured process for recording these 'deferred sales'
The process need not be complicated. Dealerships can implement a deferred sales system using the DMS to record the work and maintain contact. The incremental revenue from deferred sales could more than double the expected revenue from the aftersales business. But the real incremental benefit is customer retention. No longer will a customer be allowed to get to the stage of automatically phoning the local fast-fit when he notices he needs tyres replacing. The smart dealership will have contacted the customer well in advance to offer a free tyre check based on information in the DMS.