Growing your aftermarket opportunities as owners hold on to cars for longer

Rising age of cars on UK roads

In 2023 the number of cars on UK roads hit 35.7 million, according to the annual Motorparc survey by the Society of Motor Manufacturers and Traders (SMMT). This marked a 1.6% year-on-year increase, equating to over 546,000 additional units.

While the increase was undoubtedly driven by the post-pandemic easing of supply chain constraints, helping drive an 18% jump in new car registrations in 2023, it also reflected the increased lifespan of many cars due to improved build quality.

Consequently, British motorists now keep their cars for longer than ever with the average age of cars being driven today increasing to nine years old, more than 12 months older than they were in 2019.

This SMMT data offers a revealing insight into the age bands of cars currently in use:

• Under 3 years old 14.4%
• 3-6 years old 17.1%
• 7-9 years old 20.7%
• 10-12 years old 17.1%
• 12+ years old 30.7%

In its analysis of the 2023 car parc, Mintel, the independent research firm, estimated that consumer spending in the UK aftermarket exceeded £17 billion.

All this data illustrates just how sizeable the opportunities are for franchised retailers to grow their aftersales revenues by retaining a greater share of the servicing, maintenance and repair work of the new and used cars they sell, especially for those who actively target a greater proportion of out of warranty cars.

Q1 2024 eVHC trends

Our RTC REALaftersales data shows how franchised retailers performed during Q1 2024 compared to Q1 2023 and identifies where new opportunities may exist.

In 2024 the average time spent per eVHC increased by 7.1% to 16.59 minutes per job, up from 15.48 minutes in Q1 2023. However, this extra time did not translate into additional red opportunities, with red items being identified as part of the eVHC falling by 2.6%. In 2023, 54.2% of all eVHCs had one or more red items identified; in 2024 this has dipped to 52.8%.

Last year’s increased availability of newer used car stock, aged 0-3 years old, was an influencing factor; these newer vehicles coming into circulation and subsequently back in for service needed fewer repairs.

So, retailers looking to maximise red work will find more opportunities in older, mostly out of warranty, vehicles.

Retailers did see an increase in the average value per job in Q1 2024, up 1.9% to £308.42 per eVHC, with an average of £141.87 of that being successfully converted. However, for the average retailer this equated to £127,945 being left unconverted in Q1 alone, presenting aftersales teams with a chance to maximise on missed opportunities during the second half of the year.

Workshop utilisation monitoring

Our data shows how opportunities to deliver improved aftersales performance do exist by monitoring and benchmarking workshop operations.

When breaking down the main repair segments there are opportunities for retailers to review their data and put action plans in place to improve conversions.

For example, conversions of red work identified brakes across our data set range from some retailers performing at 31% conversion up to 71% for others; tyres from 18% conversion up to 49%; and engine repairs varying from 41% conversion up to 74%.

By being able to see which segments you are poor at converting can lead to opportunities for training and support, or new KPIs being created to drive real focus on areas that have large revenue opportunities and margin.

Identifying areas of improvement and missed opportunities

We recognise that workshops are busy environments and navigating through data can be overwhelming. This is why automating processes to identify areas of improvement and missed opportunities is so important.

Using Business Intelligence CitNOW Insights empowers retailers to stay ahead.

Designed to consolidate key information into a centralised hub accessible to all business units and locations, CitNOW Insights provides actionable insights directly to your team, empowering swift decision-making, boosting profitability and delivering continuous improvement.

CitNOW Insights simplifies the workshop management process through a range of targeted dashboards. Gaining instant access to critical data, insights and trends in a matter of seconds all presented consistently to your entire team.

The power of personalised eVHCs

CitNOW has been at the forefront of eVHCs for over a decade. We recognise their importance in building trust with customers, while increasing workshop conversions.

CitNOW Workshop takes the customer digitally to the heart of your workshop and allows the technician to show them the work needed on their vehicle while it is still on the ramp. This means the customer can quickly understand what work is required.

A 60-second video can break down perceptions and stereotypes and put the customer in control. Purely factual, without confusion or jargon, customers are empowered to make decisions because they see what the issues are. With quicker decisions comes less wasted time, more efficient workshops and better customer satisfaction scores.

CitNOW Workshop can help generate a measurable increase in red and amber work conversions.

Adding pre-diagnosis to the mix

Identifying red and amber work while you have a vehicle in your workshop is not the only way to build aftersales efficiencies.

CitNOW Triage, is a powerful pre-diagnostic customer communication service, that allows your customers to remotely capture video and photographic evidence of any issues they are experiencing with their vehicle and empowers your Service Advisors to triage the identified issues prior to scheduling or prioritising the daily workload.

CitNOW Triage saves you time and money in ramp utilisation, enabling you to order parts in advance, increase your first-time fix rates and increase your customer satisfaction scores.

Discover more about how CitNOW Insights, CitNOW Workshop and CitNOW Triage can maximise the aftersales opportunities that exist to deliver customer satisfaction and grow your workshop revenues.

Opportunities to focus in and deliver improved performance in Aftersales

Closing off Q1, we saw broadly stable results across our KPIs, but we wanted to look back at how Q1 2024 compared to Q1 2023 and discuss what this can mean for the retail network and where new opportunities may exist.

In 2024 we have seen the average time spent per eVHC increase by 7.1% to 16.59 minutes per job, up from 15.48min in Q1 2023. However, this extra time spent isn’t translating into additional Red opportunities, with Red items being identified as part of the eVHC falling by 2.6%. In 2023, 54.2% of all eVHCs had one or more red items identified, in 2024 this has fallen to 52.8%.

The availability of newer used car stock will be influencing this, last year there was a rise in available used car stock aged between 0-3 years, following the challenging post covid period where used car stock was in short supply, these newer vehicles coming into circulation and subsequently back in for service will need fewer repairs. Retailers looking to maximise red work opportunities will find more opportunities as expected, in the older 4+ segments of vehicles

In Q1 2024 retailers have seen an increase in the average value per job, increasing by 1.9% to £308.42 per eVHC comparing against Q1 2023, with an average of £141.87 of that being converted successfully by the retailer.

This is equal to £127,945 being left unconverted in Q1 alone for an average retailer, a sizable opportunity for aftersales teams to focus on.

John Law, Executive Director, CitNOW Insights commented “Opportunities to focus in and deliver improved performance do exist. When breaking down the main repair segments there are opportunities for retailers to review their data and put action plans in place to improve conversions.

For example, conversions of red identified brakes across our data set range from some retailers performing at 31% conversion up to 71% for others, Tyres from 18% conversion up to 49% and even engine repairs varying from 41% conversion up to 74%.

By being able to see which segments you are poor at converting can lead to opportunities for training and support, or new KPIs being created to drive real focus on areas that have large revenue opportunities and margin.”

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Why 2024 is looking like the year of the used car

April marked 21 consecutive months of growth for new car registrations, pushing the year-to-date total up by 8.4%, according to the Society of Motor Manufacturers and Traders (SMMT).

This sustained period of growth has just prompted the trade body to revise upwards its full year forecast to 1.98 million units.

While this is welcome news for the recovering market, demand continues to be driven by fleets, as the cost of living crisis and high interest rates continue to limit the buying power of private buyers.

However, the used car market is also going through a period of recovery, with franchised retailers ideally placed to serve the motoring needs of in-market consumers.

Used car sales up

Last year, despite rising wholesale values and retail prices caused by supply shortages, the used car market grew by 5% to 7.24 million units. Cox Automotive is currently forecasting a further rise this year of up to 7.7 million transactions, which will be a welcome 4% increase of the pre-pandemic average.

Sales of used cars certainly got off to a flying start this year. The market grew by 6.5% Q1 with 1.96 million units finding new owners, the strongest start to a year since pre-pandemic 2019, according to the SMMT.

The market has now been growing for 16 consecutive months, on the back of improved supply into the new car market generating higher volumes of used cars, especially with businesses and leasing companies replenishing their fleets.

These rising sales will undoubtedly be further boosted by the steady fall in average used car prices which peaked at £18,927 in January 2023, according to MOTORS, and have been steadily dipping most months since then until this April when they increased by 1% to £16,964, a possible indication that we could be seeing a market correction and hopefully greater stability for prices.

All these used car market indicators are good news for retailers.

What the data says

We know from our latest Dealerweb Showroom data, collated from over 1,000 retailers, that demand for used cars is positive, accounting for 57% of enquiries in April, compared to 43% for new cars. There were also small but welcome improvements in enquiries both month-on-month and year-on-year.

Additionally, used car orders accounted for the lion’s share of vehicle sales at 60%, compared to 40% for new.

This followed a solid performance for used cars over the course of Q1 with our data tracking a rate of 31% enquiries to orders, compared to 28% for new cars. While the impact of those falling used car prices only resulted in a 1% drop in order values.

Opportunities for retailers 

We believe all these market trends suggest there are opportunities for franchised retailers to increase unit sales and profitability on their digital and physical used car forecourts.

It is no secret that specialist independent retailers and car supermarkets have upped their games in recent years, so for franchised retailers to successfully compete against them they must consistently deliver the high levels of customer service expected by new car buyers to those buying used, even on out of franchise cars. For many it will mean having a clear focus on stocking desirable cars and pricing them competitively.

However, ensuring that you have accurately priced each vehicle can be a time-consuming task, as it involves checking price points nationally and against competitors in your area.

With CitNOW Insights we collect your DMS stocklist and compare it instantly against Auto Trader data, giving you the instant analysis you need to amend your stock to sell.

We automatically provide optimised prices for every vehicle, constantly checking your stock prices every day to ensure your prices are correct from day one; maximising margin opportunities and optimising days to sell time.

The power of enhanced listings

The opportunity to make a strong first impression starts the moment a used car is listed online.

This is where our CitNOW Imaging platform (formerly Auto Imaging) empowers retailers to elevate their inventories with the fast delivery of consistent and high quality digital assets.

In-app AI-powered quality control and real-time guidance on image-taking helps retailers comply with OEM and group standards; while stock feed integrations and APIs allow them to leverage content seamlessly into quick, consistent, online listings.

It can also help reduce the amount of unadvertised stock, days in stock, as well as decrease time to web and provide sales teams with a more efficient overall solution.

The results are enhanced listings that will showcase used stock across dealer websites and marketplaces and help drive buyer engagement.

Making videos more personal

CitNOW was an early advocate in the delivery of video tools to help sales and aftersales teams communicate with customers and our services are being used daily by thousands of retailers across the UK.

CitNOW Sales builds on a customer’s initial online experience and takes the dealership digitally to them. Specifically designed for sales executives to use, it provides an easy way to film, edit and send personalised videos of used vehicles as a response to individual enquiries, creating trust and building lasting relationships.

However, we believe even more can be done with video to help drive used car sales.

By asking customers about their typical usage, the sales executive can provide a highly bespoke video which can focus on anything from size requirements (do they have a family, how old are their children, do they have babies?), internal space needs (will they be using it for the weekly shop, do they have a dog?) to general practicality (how easy is it to park, does it have parking sensors and camera?).

Including this tailored content, along with showcasing the car’s condition, features and previous history, helps build relationships and trust with prospective customers.

Discover more about how Dealerweb Showroom, CitNOW Insights, CitNOW Imaging and CitNOW Sales can maximise the opportunities that exist to grow your used car sales.