Making dealers more profitable...
Most dealers in Europe have very low levels of profitability, often with margins of only one to two per cent, and with many making a loss. This is in stark contrast with the USA, where profitability is much higher.
In Europe, over 60% of the average dealer's profit comes from aftersales parts and service.
We make dealers 'think like retailers' so they will:
-
increase workshop / bodyshop throughput: get more customers through the store
-
improve customer retention: get more loyal customers returning to the store
-
improve customer spend per repair: get more spend per visit in the store
In aftersales, growth can be achieved by persuading dealers that:
-
they should target lifetime earnings from each car sold
-
selling a car is the start of the earnings stream, not the end
-
when selling a car they should pre-book the next service
-
they should ensure customers are fully satisfied at every visit
The following
relates purely to the profit contribution from service labour, which for an average dealer is around 200,000
Euros.
If a dealer adds one additional customer visit a day this will be worth around 200 - 300 Euros revenue. One more customer per day for 220 days equates
to
55,000 Euros or a 28% increase in dealer labour profit.
A dealer can increase sales by 10 to 15% in addressing work that needs to be done to meet legal and OEM standards. This typically adds around
25
Euros, which for 2,000 visits per year equates to an
additional 50,000 Euros.
This illustrates how an average dealer can increase profit on labour by around 50% through revenue generation within the existing customer base.
We also make dealers 'think like manufacturers' to turn revenue into profit:
By implementing industrial engineering processes, a dealer can substantially improve workshop throughput to achieve more revenue from the same (or even reduced) assets and people.
Research shows that around 30% of technician time is wasted and 30% is spent on indirect activities that do not result in revenue generation.
Simple process improvements can deliver 15 - 20% productivity improvement and advanced re-engineering of workshop practices can generate around a 50% productivity improvement.
These best practices offer enormous opportunities for improvement in dealers which are mature, and have a well trained workforce. A change in mindset is essential to success.
We can help deliver these improvements by giving dealers the training and consultancy to change the way they work.