2020 has been a turbulent year! COVID-19 has had ramifications on everyone’s lives and businesses. Whilst there are numerous negatives, as an industry we need to recognise and look at what our opportunities are moving forward.
Aftersales is one significant area of potential for the automotive industry. According to the latest Motor Vehicle Census released by the ABS (Australian Bureau of Statistics) in July, the Australian vehicle car parc in 2020 is 18,086,000 vehicles, an increase of 1.5% over 2019, and almost 10% since 2015. This has occurred in a negative new vehicle sales environment. Compare this vehicle car parc to our pre-COVID annual new vehicle sales of approximately 1.2 million.
Australian Passenger and Light Commercial Vehicles on Register:
Source: Australian Bureau of Statistics 9309D
Next consider a few more pieces of information
- Generally franchise service departments service 1-5 year old vehicles,
- A portion of people now keep their new vehicles for 5-8 years, and
- We have seen some non-franchised service chains 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 potential 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 through most of the warranty period. After that 5-year period, for a variety of reasons, we then lose the vehicle.
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 for you to consider include:
1. 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.
2. 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.
3. Do our customer touchpoints happen 100% of the time?
A good process that is only followed 75% of the time is not a good process! Do 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?
4. What are your plans for over 5-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 5 years when the warranty runs out (or 3 or 7 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.
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