Franchised dealers are missing out on more than £450 million worth of revenue by failing to sell ‘red work’ identified during vehicle health checks, according to new data from automotive industry consultancy BTC.
Across the UK’s 4,900-strong franchised dealer network, this equates to £92,145 of lost sales per dealer, raising concerns that independents and rapid-fit operators are being allowed to benefit from missed sales opportunities.
The data was gathered using autoVHC, BTC’s electronic vehicle health check system, which recorded information from a sample of 500 UK dealers in 2014. It revealed the dealers sold an average of just 56% of urgent red work – such as severely worn or illegal tyres and faulty brakes. This equated to a total of £46m of missed sales across the sample. On a national scale, it identified that this could mean unsold red work represents a lost business opportunity of £451.5m per year.
BTC chief executive Guy Allman said: “Dealers are letting too much urgently required work slip away. Red work is identified as faults that, if not dealt with, render the vehicle un-roadworthy. So when a customer decides not to have it done at a dealer, they’re usually looking at having it carried out by an independent outfit.
“Once customers make this decision it’s hard for dealers to win them back. So it’s not just a case of losing the immediate sale, it also means missing out on future business. There is also a duty of care aspect. If the customer doesn’t have the work done there and then, they’re basically being allowed to drive off the forecourt in a car that is in a dangerous condition.”
The data also revealed that 22% of customers at the sampled dealers did not have vehicle health checks completed as part of their service. Work sold once a health check has been carried out stood at an average of £69.70 in 2014, meaning failure to complete checks equated to a further £24.4m of lost sales across the 500 dealers, which could represent an additional £239m of annual missed sales opportunities nationwide.
A total of £84.6m worth of ‘amber work’ was also identified in 2014 but just 16.5% of this was converted.
Allman added: “It is also important that dealers are able to sell ‘amber work’ at a later date. Since the vast majority (85.5%) is not carried out on the day, it is vital that dealers have an effective follow up process in place to secure the future revenue."