Boost yield, not volume
September 21st, 2009 by Richard Aucock
RAC Warranty says that used car shortages mean car dealers should be targeting yields to grow their profits.
Serious stock shortages mean pure volume will not be able to grow revenues.
The trick here, says the firm’s Ian Simpson, will be to increase upsale of products such as warranties and GAP insurance.
‘Dealers will almost inevitably sell fewer cars in the medium term until stock levels start to recover,’ he warned.
The true extent of this will only become clear in the coming months.
This means car dealers should be looking to other means of growing profits – and highlights warranties and other add-ons as a prime opportunity. This is because, he says, customers are currently a lot more receptive to such products.
Warranty sales for the firm, he reveals, have risen by 20 percent during the past year.
Thus, car dealers should ensure a properly structured sales process is in place. Car dealers should clearly offer point-of-sale materials, that explain the benefits and value for money.
‘In order to maximise these sales opportunities, dealer managers need to ensure that their sales staff are trained to sell products to used car customers and have access to the right sales material – as well as being properly incentivised.’
Do so, he reckons, and there can be a 25 percent uplift in sales, compared to adopting a more haphazard approach.
‘Where warranty sales are not reaching their potential, it is usually because there is a lack of commitment on the part of dealer management and a lack of understanding on the part of sales staff.
‘This is something that dealers may not be able to afford to indulge in the coming months as stock shortages start to take effect.’
Tags: aftersales, profit, rac warranty
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