There are changes looming that will have a marked impact on the profits car dealers earn from selling add-on products to their customers.
Every dealer knows by now that the Financial Conduct Authority (FCA) has put showroom sales of GAP insurance under its spotlight, but what may not be so clear is the threat from interfering carmakers and smartphone-equipped consumers to the traditional profits generated by non-regulated add-ons.
In an AM-online poll this month, 60% of dealers indicated they do not expect their earnings from add-on products to increase in the near future.
The advice from industry consultants in our analysis feature on add-on profit models is that dealers may have to take less profit per product but simply sell a broader variety of them to try to make up the shortfall. Some of the UK’s franchised networks seem to understand this already – our poll results showed a third of dealers currently presents five or more ancillary products to each car buyer.
Of course, to stand a chance of offering those add-ons there has to be an attractive, competitive car to sell in the first place, and some manufacturers seem to be doing this far better than others. Our 2014 Franchise Guide is designed to allow you see which brands could help you to grow your business, and which might be holding it back.
Elsewhere in the October 2014 'upselling' issue of AM - Automotive Management
♦ Glass’s Dr Richard Parkin wonders if free service plans and warranties will replace the deposit contributions offered on PCPs.
♦ Professor Jim Saker argues that for our industry to make progress, we need to promote apprenticeships and formal qualifications as a holistic package.
Also: the BMW 2 Series Active Tourer reviewed and why John Clark of John Clark Motor Group is taking a cautious approach despite record results.
Coming up in the November issue of AM - Automotive Management
We look at whether the role of the physical showroom is changing in line with contemporary consumer behaviour; automotive property experts advise dealers how to overcome the challenges of planning and completing showroom refurbishments and relocations; we examine how dealerships can use modern technology, from Wi-Fi and tablet PCs to interactive screens and coffee bars, to engage and entice showroom visitors and Tim Rose visits the Paris Motor Show to find the star cars of 2015.