Dealers urged to focus on growing aftersales

Dealers need to refocus their attention on boosting aftersales as the car retailing sector faces another tough year of trading, according to Don Reed (pictured), the influential US automotive speaker.

Addressing the ASE Aftersales Conferences in Slough and Manchester, Reed outlined areas which were helping US dealers turnaround their businesses during the economic downturn.

Reed emphasised the key role played by service advisers and service managers in increasing dealership profitability.

Reed argued that the profile and accountability of aftersales departments needs to be raised. With dealers having the potential of locking new and used car customers into servicing and repair work many are let down by a failure to exploit these existing contacts.

“Our approach to salesmen and service advisers is different. A salesperson who underperforms doesn’t last but what happens to a service adviser who doesn’t sell enough workshop hours?

“A service manager selling 80 per cent productivity has a job for life but that’s not enough. If a new or used car sales manager doesn’t sell cars then they’re gone.

“You must hold people accountable for their performance,” he said.

According to Reed a key step to achieving greater accountability is a clear definition of what is service absorption.

His definition of service absorption is the percentage of dealership expenses that are absorbed by the fixed operations departmental gross profit.

He then illustrated the importance of aiming for 100 per cent absorption.

“This would mean no new or used vehicle dependency,” he said.

Reed said the four essentials to increasing absorption were: controlling expenses, improving profit margins, raising sales per retail job cards and increasing the number of job cards.

He did concede that British dealers are better than their American counterparts at achieving service absorption with the UK currently tracking at 65 per cent compared to 56 per cent in the US.