Advertisement feature from Tjekvik
Maximising profit from new and used car sales activity isn’t as easy as it once was. The Financial Conduct Authority (FCA) banned discretionary commission arrangements (DCAs) attached to motor finance agreements in 2021, and earlier this year it called on dealers to stop selling Guaranteed Asset Protection (GAP) insurance products due to concerns about offering ‘fair value’ to consumers.
DCAs, which were in operation between 2007 to early 2021, enabled ‘brokers’ (including dealers) to earn additional commission by adjusting the overall interest rate on a new finance agreement. An ongoing FCA investigation could lead to compensation payouts for customers who were not made aware of the DCA within their contract, and the implications for the motor retail sector are yet to be determined.
Parliament’s Treasury Committee were told earlier this month by the FCA that a formal redress scheme is a distinct possibility, and finance firms like Lloyds Banking Group are already putting aside hundreds of millions of pounds in preparation for potential payouts.
Wider consumer pressures also remain a factor impacting dealer profitability. Inflation remains stubbornly above the Bank of England’s target of 2%, and the ongoing cost-of-living crisis means many household incomes remain stretched. Demand is being impacted, and used car customers in particular are pushing harder for an attractive deal.
This all means that dealers are finding they need to work harder to optimise revenues and profitability – both in sales and aftersales.
Tjekvik’s digital self-service solutions help dealers create additional revenue opportunities by presenting specific value-added products and services to customers during the vehicle check-in and check-out process.
Aftersales departments can be crucial in supporting the quest for additional income. As many customers are more comfortable in choosing such items at their own pace, digital self-service helps to take pressure off service advisers to upsell and helps managers drive additional revenue opportunities consistently and measurably.
Last year, UK dealers made an average of £10,000 from selling value-added products and services via Tjekvik, with the top 10 earning an average of £59,000 during the year. The most popular products sold were air conditioning services, top-up fluids, key fob batteries and protective equipment.
In 2023, over 154,000 customers in the UK opted to purchase additional products and services during the Tjekvik digital check-in process, with an incremental value of more than £5.8million. This kind of solution is also helping dealers retain customers, with over 103,000 enquiring about service plans for their vehicles via the digital interface.
Vehicle sales departments benefitted too, with over 95,000 UK customers using digital self-service to request valuations on their vehicles, providing a valuable additional pipeline of leads.
While earning much-needed additional revenue may be more difficult in today’s climate, the opportunity is still there for those who explore ways to enhance established processes.
To learn more about Tjekvik’s solutions, please visit: www.tjekvik.com