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WHILE Covid-19 has had ramifications on everyone’s lives and businesses, as an industry we should look at what are our opportunities moving forward. One of the most significant areas of potential for the automotive industry is aftersales.

According to the latest Motor Vehicle Census released in July by the Australian Bureau of Statistics (ABS), the Australian vehicle car parc in 2020 is now more than 18 million vehicles, an increase of nearly 270,000 units over 2019.

That’s 270,000 more vehicles available to be serviced than a year ago.

And since 2015 there are now 1.63 million more vehicles that require service than there were in 2015 – just five years ago. This has occurred in a negative new-vehicle sales environment.

Every (pre-Covid) year we have a market of around 1.2 million new vehicles coming onto the roads which new-car dealers process through their businesses, but the car parc is growing by some 325,000 vehicles a year and you have to ask who is getting to service those extra cars?

And given that there are around 3000 dealership rooftops, that means if dealers were keeping up with just the growth of the cars on the road, they should be increasing their service ROs by at least 100 cars a year just to keep pace with the growth.

Here is what it looks like:

Australian Passenger and Light-Commercial Vehicles on Register:
2015 16,456,455
2019 17,817,566
2020 18,086,265
Source: Australian Bureau of Statistics 9309D

Now consider a few more pieces of information:

  1. Generally franchise service departments service 1-5 year-old vehicles,
  2. A portion of people now keep their new vehicles for 5-8 years, and
  3. We have seen some non-franchised service chains dramatically increase their footprint over the last couple of years.

Combining these points with the size of the car parc in Australia highlights again how many sales we are potentially missing in the aftersales area – both service and parts. Traditionally aftersales sees the new vehicles we put in the funnel each month, and then there is steady erosion through most of the warranty period. After that five-year period, for a variety of reasons, we then lose the remaining vehicles.

Given the “size of the aftersales pie” why do we keep letting all those vehicles disappear from our dealership ecosystem? Particularly when the return to us can be higher for aftersales work after that initial five-year period.

Some thoughts to consider include:

  • Does your Dealership/Group have a plan for contacting customers/guests throughout the ownership of the vehicle?

In some cases, we still don’t see more than a rough contact schedule for aftersales customer contact and it usually tapers off after a certain period.

  • Is that contact thorough, consistent and proactive?

Is your contact schedule detailed and flexible enough to manage each vehicle and customer? Or is it one size fits all? Remember we are in a great situation – we know who our customers are! We should manage each one until they are lost (vehicle sold, customer moved away, etc).

If a customer isn’t coming in for their next service, what are we doing to manage that individual customer to get them back. When they leave our service department for a competitor, they rarely bring that vehicle back.

  • Do our customer touchpoints happen 100 per cent of the time?

A good process that is only followed 75 per cent of the time is not a good process! Does your team work through your customer contact processes and guidelines consistently every time? When the relevant people go on leave, does this activity still occur?

  • What are your plans for over five-year-old vehicles?

Consider and put in place strategies for obtaining service work for these vehicles. Look at what your local independents are doing, and consider what needs to be done to prevent spillage of your customers to these external businesses. Does the customer want to feel like they are paying a better labour rate? Would a useful loyalty scheme work? Survey these customers if needed but find out what option(s) you need to provide to keep them.

If you want to improve the profitability of your business, look no further than the opportunities that still await in many of your service departments.

Often there is too much focus on the captive customers from new to five years when the warranty runs out (or three, seven or even 10-year warranties in some instances). It’s important to start focusing on the lifetime of the vehicle, not the lifecycle of the particular customer.

You sell the vehicle – it is your customer to lose; or retain.

Rohan Meyer

*Rohan Meyer has recently founded the AdTorque Edge Advisory team to conduct business consulting & training in dealerships, dealers groups and OEMs.

By Neil Dowling

Dealer Auction