19 August 2013

Latest figures from ASE suggest a typical auto retailer has made over twice as much profit in the past 12 months as they did in the previous year. The driving force, of course, is new car sales, with manufacturer volume bonuses more than compensating for margin on the metal – which remains under pressure.

 Higher new car sales over the past 18 months are starting to have a positive effect on aftersales revenue, too. Absorption, the holy grail of the auto retail business model, is starting to creep back up but it’s still worryingly low at around 56%, against an ASE target of 80%.

 Despite this, top retail group bosses tell me there is no sign of a let up in pressure from carmakers to spend money on ever-bigger premises or posher, more expensive showrooms. Digital technology and changing customer behaviour is allowing most retail businesses to cut fixed costs – not so in our industry, it would seem.

 So, maybe it’s time to look again at the business model. Should absorption be the key metric? And, if 55% to 60% is the new norm, how does that affect the rest of the business?

These are the fundamental strategic issues we’ll be tackling at our Aftersales Seminar on September 5. We’ll also be looking at the customer experience in aftersales reception and the market trends that will help you boost retention.

The speaker line-up is, quite possibly, the strongest we’ve put together. I look forward to seeing you there.

Rupert Saunders

 Join our LinkedIn group and share your your views with us – and other readers

Tags: absorption rates, aftersales, ASE, Blog