Dealerships across the UK could be missing out on as much as £460 million worth of aftersales opportunities as they fail to sell 44% of 'red work' to customers.
Data compiled from 500 retailers by automotive training and software company BTC showed that aftersales departments were struggling to sell the urgently required work, which can pose a serious safety risk or make vehicles illegal to drive.
Results from the surveyed retailers, all of whom used BTC’s electronic vehicle health check software, autoVHC, in 2015, indicated that the trend was potentially costing each of the UK’s 4,900-strong franchised dealer network £94,084 per year and show no improvement on figures obtained last year.
Furthermore, BTC found that vehicle health check completion rates had also dropped, with incomplete checks representing another missed revenue opportunity of £519 million nationally.
BTC chief executive Guy Allman said: “The failure to sell Red work continues to be a major missed revenue opportunity for franchised dealers.
“When you consider that aftersales departments typically contribute 50% of a dealership’s annual profits, this is a significant problem that needs addressing.”
He added: “Red work is identified as faults that if not addressed pose a serious safety risk and in many cases will mean the owner will be breaking the law if they continue to drive the vehicle.
“The fact that dealers are only persuading customers to address these issues 56% of the time also raises a major duty of care question, with the threat of potential legal action another concern.”
The problem of missed aftersales revenue is also being compounded by an increasing failure of dealers to complete health checks on vehicles presented to service departments, BTC said.
The average completion rate fell from 78.2% to 73.3% in 2015 and with the average amount sold per health check at £70.49, this now equates to a further missed revenue opportunity of £105,973 per dealer, £62.7 million across the 500 dealerships surveyed and as much as £519 million nationally.
Allman added: “Despite the fact that vehicle health checks are a proven way of generating sales and demonstrating a level of service to the customer, many dealers are letting this opportunity slip away.”