Car dealers slow to react as after-sales revenue declines

Franchised car dealers are becoming increasingly concerned about the likes of Kwik Fit and Halfords offering the £99 service. In their eyes the investment in training staff in the latest technological advances and the perception of value added customer service mean that having to compete on price alone is putting them at a disadvantage.

The franchised main dealers after-sales sector, as we have widely discussed, is under pressure like never before (New EU legislation means a shake-up for car servicing) and franchises are seeing their share of the market diminish, especially as customers look to save cash any way they can during this protracted downturn. As one Sales Manager remarked to us ‘the problem is that if your dishwasher or fridge breaks down you will pay £70-£100 to have it fixed but a car, which costs thousands of pounds more to buy, will make customers baulk at paying £300.

Of course many will say that dealers only have themselves to blame and have been short-changing customers for far too long. Now car owners are given a viable alternative choice and price as to where they maintain their vehicles, main dealers have been too slow to react and these dealers have seen their margins eroded as a result.

To be fair main dealer facilities in general are better than they have ever been, and although paying out for servicing work is clearly a distress purchase, dealers have done their best to make the environment in which this occurs, and the service they offer match the customer service (if not price) expectations.

But at the end of the day money talks, as they say, and if a customer perceives that they can get exactly the same outcome for a third of the price they will obviously consider it.

For too long now many after-sales departments have relied on the internal sales work for the majority of their income. It comes as no surprise that now they are under pressure to try and gain external profit as retail sales drop they are, in some cases, failing to meet the challenge. This vacuum is being filled by service centres, which are backed up by strong brands that will greatly benefit by attracting customers away from the traditional after-sales route.

The growth of social media will certainly have a bearing on how customers communicate with regard to the service they receive and how they are kept informed. This crystal clear, modern communication process will, once fully embraced by retailers, be the best way for franchised car dealers to promote the service they offer and help them offer customers a tailor made price package when they need their car serviced or fixed.

Subscribe to Motor Trade Insider by Email