SERIAL automotive IT entrepreneur Mark Lancaster has made significant modifications to his innovative Carbucks Rewards program in a move that will see participating dealers generating monthly profit from just a handful of sales.

The modifications to the program come at a time when dealers are searching for additional profitability in the face of tough trading conditions in the showroom where high stock levels and eye-watering holding costs are wearing away dealer margins.

The Carbucks Reward program was announced in April 2024. While delivering significant financial rewards for dealers as the customer base grows over the longer term, adoption tended to be put on the back burner by dealers who have been scrambling for more immediate additional efficiencies and returns from their vehicle sales activities.  

Mr Lancaster said that this led to his company Connected Vehicles to develop new elements  and revisions to the Carbucks program which are designed to deliver immediate additional sales revenue for selling dealers and associated profitability for the participating dealerships.  

Mark Lancaster

Under the changes to the Carbucks program, Carbucks Rewards is now free to participate and an upsell product called Carbucks Protect has been introduced.

Carbucks Rewards is essentially the same loyalty-rewards program that Connected Vehicles announced last year although it is now free and no longer requires the monitoring device to be fitted to the car.

Readers will remember Carbucks is a remarkable electronic automotive ecosystem that provides an ongoing revenue stream for dealers, cash benefits and discounts for vehicle owners and sales and marketing opportunities for participating auto (and non-auto) merchants and service providers.The Rewards service revolves around dealerships electronically linking their customers into its systems via their mobile phone. From then on, every time the customer buys from one of the participating goods or services brands, the dealer gets a share of the purchase amount.  

Wherever that customer goes in Australia and buys from a participating vendor, the dealer gets a cut. 

Mr Lancaster said that according to projections calculated by Pitcher Partners, some dealer groups can benefit from putting most of their customers into the scheme to the tune of some tens of millions of dollars a year. The average dealership could generate a million dollars a year if most of its customers are signed on to the system.

Dealers simply encourage car buyers to download the free Carbucks Rewards App into their phones at no cost and from then on the owners (and dealer) get to share in cash rebates that are allocated to their owners’ Carbucks account. The more owners who download the app the greater the dealer’s Carbucks base will grow over time.Now, by making the app free and adding tangible benefits and cost savings on everyday vehicle needs (in addition to the cash rebates and rewards program), Carbucks believes that participation in the rewards program will be a no-brainer for dealership customers.

In addition, the Rewards program offers a range of customer benefits that monitor the health of the car and where owners get certain minor repairs and other benefits, also at no cost.

Carbucks Rewards provides drivers with:

• Free tyre puncture repair (up to one claim per year, max three total claims)
• Free windscreen repair (also part of the same annual and total claim limits)
• Free vehicle health assessments
• 24/7 vehicle health monitoring
• Dedicated concierge (for service bookings, claims, and general support)
• Three-year programs (coverage and benefits remain valid over a three-year term)
• Cashback and exclusive discounts (use rewards on car repairs or everyday expenses)
• Carbucks rewards is designed to help drivers save money while confidently maintaining their vehicles – at no direct cost.

But, in order to generate a more upfront revenue stream for dealers, Carbucks has added Carbucks Protect which is a wear and tear program sold by dealers covering items not covered in manufacturer warranties.

Mr Lancaster said that with sales of the Protect program dealers can break even on just three or four sales a month. Indications from dealers who have signed on to the program suggest dealers should be able to make between 20 and 30 sales a month.

This has the potential to generate a profit of between $14,000 and $21,000 a month or $168,000 to $252,000 a year per rooftop, he said.

Carbucks Protect is a separate, more comprehensive wear-and-tear coverage designed to shield dealers’ customers from unexpected vehicle expenses. 

With Carbucks Protect, owners receive long-term peace of mind through coverage on commonly replaced parts and services, such as wiper blades, 12V batteries, brake components, and more.

For example, Carbucks will refresh or repair or replace key fobs, replace worn out front and rear wiper blades, replace new-for old a 12V battery when it is worn out, replace worn out or damaged tyres, replace worn brake pads, rotors or drums.

It also includes a dedicated concierge service for claims and on-road support, all rolled into a set timeframe of three years.

This upgraded program goes beyond the benefits offered by Carbucks Rewards, focusing on major (and often costly) maintenance items, ensuring owners stay on the road with minimal hassle or surprise bills. 

Carbucks Protect has an RRP from $1599, allowing the dealer a margin of $700, and can be sold alongside new vehicles. It complements the manufacturer’s warranty, helping drive dealer retention. Current data shows an average 30 per cent penetration on all new cars sold.

Repairs and replacements are made by the selling dealer at no cost to the owner. Dealers invoice Carbucks to recover the cost.

Mr Lancaster said Protect is a program that covers the wear-and-tear items on a car. 

“It’s not an extended warranty. It complements a manufacturer’s warranty. Manufacturers don’t cover tyres, they don’t cover batteries, they don’t cover key fobs, they don’t cover wiper blades and all those types of things. 

“So we thought that because we’re monitoring the health of a vehicle we might as well provide the natural upsell. We’re monitoring tyres, what if we could replace that tyre when it was due?

“We released that with Suttons in February. They sold 70 policies in the very first month at one site with an average of $700 margin per policy. They made $49,000 in month one and then backed that up again in March for an earn of more than $100,000 in two months of gross profit selling this product.

“So we cover that car for three years and in that time the customer can get six tyre puncture repairs or four tyre replacements.

“So we worked out over the three years, the average person, if they’re still servicing with the dealer, will need to get a new set of tyres in that period. So we replace those tyres for free. We’ll do the four tyres in that time. 

“We’ll also do a set of wiper blades in that time. We do brakes; so brake pads, drums, rotors. Again, we’ll do the full replacement in that time. A battery can last longer than three years, but if it happened to be faulty, we replaced the battery as well. 

“And if key fobs need to be repaired, if it’s not working for whatever reason, key fobs are quite expensive. We will repair and replace a key fob as well. 

“We think everyone who takes our policy will get a free set of tyres, a free set of wiper blades and free brake replacement for every single policy.”

Mr Lancaster that the average consumer could save about $3500 in claims.

“We know the consumer will make the claim, because the dealer can do it on their behalf effectively. If you take your car back to the selling dealer, the service managers will ask if the car is covered by Protect. If it is covered they will look at the wiper blades and the tyres and fobs and so on because they can replace them and tell the customer they did that at no charge as part of the program; and off they go. We pay the dealer.

“We have just released this product and we have dealers banging down our door now, because they all want the instant revenue,” Mr Lancaster said.

“Dealers are telling us that in the first 30 days they are in a positive return on investment for the program.  They sell four Protect policies and it pays for the entire platform, just four policies, and we’re seeing the average rooftop now is selling 20-plus policies a month. So they’re all flying, they’re all going really well.” 

Mr Lancaster said the Rewards program is now a free giveaway whereas previously it involved the cost of the transponder health monitor which is no longer needed because it is now handled by the App and the mobile. 

“All they have to do is download the app, and even in that, we will cover three repairs of either a tyre or a windscreen chip. And we’re doing that for free for consumers, because it increases the number of customers that are downloading the app. 

“They get it for free when they leave the dealership, and that’s really driving our numbers up, which means the retention is going to be even higher on the other side.

“And what’s really interesting is Protect is a product that can be sold on new cars because this program has been designed specifically to add value to new cars. 

“It does not compete with a manufacturer’s warranty. It complements it and only covers the things the manufacturers don’t cover, which is giving the consumer a lot more satisfaction with the purchase. 

“The majority of our sold policies are actually on new cars, with so much of our interest from dealers asking: ‘Can I offer this on my new cars?’”