Franchised workshops face £300m slump in Segment 1 work in 2021

Franchised workshops face a loss of up to £300m over the next 12 months as a result of the continued slowdown in new car sales, according to leading MOT and servicing booking site, BookMyGarage.com.

The market has already recorded over 620,000 fewer sales than last year*, with the SMMT expected to announce another negative month for November due to Lockdown 2.0.

“Those sales are gone, but it’s the workshops that are now going to be hit as annual servicing and warranty work disappears too,” explains Karen Rotberg, co-founder of BookMyGarage.com. “Yes, new cars make the headlines today, but the knock-on will be felt for the next three in aftersales unless action is taken.”

With capacity, and squeezed margins, dealers must ‘grab the opportunity’ to fill the void by proactively attracting lapsed and new customers from the Segment 2, and even Segment 3, car parc.

Former Stratstone and Lookers Aftersales Director, and SecretService ambassador, Gavin Ruddick, added: “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+ vehicles currently dominated by fast-fits and independents.”

Due to historic sales successes and subsequent new car market growth, Authorised Repairer capacity over recent years has been highly absorbed by our enlarged 0-3 parc, which in turn means our sector is traditionally poor (losing a higher percentage than we retain) at penetrating that space and holding onto it.

That’s why the anonymised Secret Service offering powered by BookMyGarage is working extremely well as  consumers are able to compare like-for-like without devaluing the brand, influencing consumer perception positively, and allowing customers to book directly into retailer’s available diary capacity in real time (franchise dms permitting).

Since March, when the COVID-19 crisis began, 75% of vehicle registration look-ups on BookMyGarage’s innovative system were for Segment 2 and 3 vehicles with SecretService dealers now securing more than a third of those bookings in their area.

Moreover, these slightly older vehicles generate invoice values 80% higher than the booking value with Final Invoice Values (FIV) 13% higher than the normal dealership average.

“Next year 0-3 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,” concludes Ruddick.

BookMyGarage.com has helped more than 4.2 million motorists obtain instant comparison prices for MOT, service and repair procedures through its network of over 9,000 franchise and independent UK garages.

*Article Source www.performancecomms.com