Used car dealers who are looking to expand their business in 2016 should consider introducing service plans or extending their scope, according to EMaC.
The company, which provides service plans for dealers, said there was a large gap between point of sale penetration when it came to service plans for new and used vehicles. Whereas service plan penetration stood at more than three-quarters for new car sales (76 per cent), the figure fell to less than a third (32 per cent) for used vehicle sales.
Seeking new ways to expand your business and increase your profit margins should be a key part of your business planning. Offering service plans can help with customer retention and client loyalty over the longer term. If you are considering moving into this area of business or extending your offering, check that you have the right levels of motor trade insurance to provide the correct coverage for your business.
EMaC’s new versus second hand car service plan statistics came from annual research carried out as part of its Voice of the Dealer campaign.
The company said that used car dealers were missing an opportunity, after researchers discovered that sales executives tended to believe people buying a second-hand vehicle were potentially less interested in the after sales service the dealer was able to provide.
EMaC managing director Angela Barrow said: “Many dealers have switched onto the retention value of service plans for their new car customers.
“However, at sales executive level it seems there is a reticence to promote service plans to the same degree. Given the retention and lifetime value opportunities and the reality that used sales volumes are typically three times greater than new.”
She said the company was “committed” to working with dealers to help them recognise the potential profits that service plans could earn in the year ahead.