Declining new car sales in 2020 are set to deliver a £300 million aftersales revenue decline for franchised car retailers over the next 12 months, according to BookMyGarage.
The online aftersales booking portal responded to Society of Motor Manufacturers (SMMT) new car registrations data, which today (December 4 revealed a 30.7% year-to-date decline to the end of November – equivalent to 663,761 units – by calculating the impact on workshops across the UK.
Former Lookers aftersales director and BookMyGarage SecretService ambassador, Gavin Ruddick, said: “Next year 0-3 vehicle parc retail turnover reduction calculates at £300m, based on average invoice values seen throughout 2019/20, but it’s a further £300m and then again in the following years.
“We have to act now to grow aftersales contribution, improve overhead absorption back to 100% minimum, in order to underpin dealership return on sales.”
Back in October Vauxhall aftersales director Richard Dyson, raised concerns that car retailers risk returning to an aftersales famine in 2021 after the “feast” experienced after the COVID-19 lockdown and the race to catch-up with a backlog of postponed MOTs.
He told AM that franchised dealers must put strategies in place to maintain momentum at the start of 2021.
“While we will hopefully be on a more positive footing by then, Q2 of next year is already on our minds as that’s when new car registrations really fell off a cliff due to the COVID crisis,” said Dyson.
Karen Rotberg, co-founder of BookMyGarage, said that now was not the time to dwell on 2020 sales lost to the impact of COVID-19 and the shift towards electrification due to ever more stringent EU emissions regulations.
Instead, she has urged franchised retailers to acknowledge and embrace the opportunity presented by Segment 2 and 3 cars, putting measures in place to help drive older cars back into dealership workshops.
“Those sales are gone, but it’s the workshops that are now going to be hit as annual servicing and warranty work disappears too,” she said.
“Yes, new cars make the headlines today, but the knock-on will be felt for the next three in aftersales unless action is taken.”
Ruddick said: “Segment 1 customer visits are predicted to be down 35% by the end of 2021. That represents a significant reduction for AM100 dealership groups delivering an operating margin of above 40%.
“A lack of action to replace these transactions is not an option as this will come at a cost for Authorised Repairers, who must now access and unlock the potential from 3-year-plus vehicles currently dominated by fast-fits and independents.”
BookMyGarage’s anonymised Secret Service offering – recently offered at a discounted rate to What Car? marketing portal customers – allows consumers to compare aftersales providers like-for-like claiming to reduce the risk “devaluing the brand”.
Customers can then book directly into a retailer’s diary in real time.
BookMyGarage claims that the platform give access to an older vehicle parc, with these slightly older vehicles generating invoice values 80% higher than the booking value with Final Invoice Values (FIV) 13% higher than the normal dealership average.