Automotive Industry Digest

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A Loss of Over £1BN in Aftersales Revenue is Looming

The fall in new car volumes over the last three years is set to hit aftersales revenues significantly, according to new research conducted by REALtime Communications Data Science Team at its REALinsights business. The net result is a forecast shortfall of £1.3 billion in new car servicing revenue over the next four years.

Commenting on the risk to dealers REALtime Communications Insights and Data Director John Law comments;

“We are now at a crossroads where higher volume service revenue from the scheduled third (major) servicing of new cars sold in 2019 starts to wash through (at the higher pre-pandemic sales volumes). After that, the traditional scale of activity will be impacted by the significantly reduced scale of new vehicles and the subsequent fall in the first and second servicing of cars sold during 2020 and 2021.

“The numbers evidence very clearly a significant shrinkage in aftersales revenues for the next few years. All the result of 1.8 million vehicles between one and three years old having been lost to the franchise network.”

The monetised impact of a loss of £1.3 billion in revenue could be even more significant. The number excludes additional upsell opportunities, the chance to place customers back in a new car, the acquisition cost of ‘re-acquire’ customers that may have gone elsewhere to purchase their used car, the inevitable impact on aftersales of a growing electric vehicle parc and the unknown impact of any switch to agency retailing models.

The situation is likely to deteriorate further without affirmative action as Richard Robinson, COO at REALtime Communications, concludes;

“While I’m delighted by the positive impact created by used vehicle sales, retailers should not ignore the pressure on aftersales and its traditional role in supporting overhead absorption. Retailers must look for new ways to increase efficiency and productivity and evolve their operating models to retain and enhance lifetime value customers. This is true for both new and used car sales, notably those recent conquest sales and the all-important service work available to them.

As always, we will be working with our dealers to help them to adapt and optimise their performance in this rapidly evolving landscape.”

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Automotive Industry Digest

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