Aftersales gap to cost retailers £1.3bn
24 January 2022
Retailers face a loss of routine service revenue amounting to £1.3bn over the next four years, due to the shortage in new car availability. Real Time Communications estimates there may be 1.8m fewer vehicles aged 1-3 years by the end of 2022.
This major servicing shortfall is currently being masked by the high-margin new and used car boom, but is expected to bite in 2022 as 2019 cars fall out of franchised networks. What’s more, it won’t be resolved until the continuing chip shortages are addressed.
(An Infineon executive has warned the chip shortage will last until 2023.)
The average service value of a new car to a franchised retailer during its warranty period is £150 in the first year, £350 in the second and £150 in the third – which is how RTC calculates its £1.3bn figure. “The true impact is yet to be realised,” said RTC’s John Law. “The numbers clearly show a potential big loss in aftersales revenues for the next few years.”
RTC is urging retailers to identify opportunities from existing customer data and mine their DMS to find new opportunities, “constantly encouraging motorists to return ot the retailer rather than go elsewhere”.
The growth in used car aftersales won’t offset the new car losses either, it adds, as warranties are traditionally one year versus three.
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