Investing to make a tidy profit

In the past, luxury brands have led the way in building cutting edge showrooms and workshop facilities but recent developments have seen volume manufacturers attempting to bridge the gap. While the investment in improved facilities has traditionally been the preserve of the showroom, franchised dealers are increasingly looking to invest in their aftersales facilities in a bid to improve customer service and retention. Fuelling the changes are the heightened expectations of consumers who now expect a more professional approach when servicing their cars. It is a trend described by Peter Cooke, KPMG Professor of Automotive Industries Management at Nottingham Trent University, as a cultural switch from traditional trading to retailing. “A professional image is something dealers are now looking to create,” Cooke said. “There has been a switch to automotive retailing rather than automotive trading. What we are seeing now is the dealership looking to have an increasingly customer-friendly facility.” Cooke said dealers had to focus on more than just selling cars and, with aftersales accounting for a third of profits, this was an important area. “Car sales now are increasingly about selling a total package, it's not just about the metal. “This helps encourage customers to come in between buying a car and between those six and 12-month service intervals. “It's about getting them into the habit of coming into the dealership.” One of the major developments in dealers' aftersales business has been the amount they are prepared to spend on the workshop. In recent years major dealer groups including Park Lane BMW, Ford representative Ringways and BMW Haroldwood, have all spent millions of pounds on their aftersales operations. Dominic Wishlade, managing director of workshop design company Dura, claimed that one of the reasons dealers were increasing the amount they invested in workshop facilities was that viewing windows in dealerships had become more commonplace. He said workshops had become more professional environments, driven by consumer expectations and it made sense for dealers to invest in aftersales because it was often the most profitable division in a dealership. “Dealers and manufacturers are trying to bring workshops standards up to the level of the showroom because that's where the revenue is,” Wishlade said. “Customer viewing areas now mean that workshops have to be tidy. “People don't want to look through the workshop window and see their £30,000 car being worked on in a mess. If they can keep one more customer then that makes all the difference to a dealer.” Wishlade said that the workshop systems Dura produces were originally acquired by just the luxury brands but that the trend was starting to change. Franchised dealers of volume brands were now getting in on the act. “We are starting to talk to the volume brands as the type of technology we use starts to trickle down,” Wishlade said. “Our sales are changing and in a way that's inevitable, there is an obvious transition as the majority of revenue is taken in the workshop not the showroom. “The type of product we supply is becoming more mainstream.”