Franchised dealers may limit their workshop utilisation and customer retention rates by over-relying on distance used car sales, according to the JudgeService Barometer.
JudgeService found 51% of customers who had purchased a used car from a dealer within a five mile radius also took out service plans. This fell to 47% for those travelling 5-10 miles and to 40% for 10-25 miles.
Neil Addley, managing director of JudgeService, said: “The distance selling of used cars has become an increasingly important part of franchised dealer activities, however for some businesses it can create a disconnect between sales and service departments.
“Our research reveals the high volume of service plans sold to used car buyers living within 10 miles of the dealers they purchased from. This highlights the importance of winning and nurturing local customers and the vital role played by service departments in driving retention when customers buy their next car.
“Distance sales have an important role to play in managing stock and hitting sales targets but they are often one-off hits that need to be part of a balanced strategy that also focuses on building loyal local sales and aftersales customers.”
The rate of customers taking out service plans along with their used car purchase falls to 32% for those travelling 25-50 miles and 25% for distances over 50 miles.
Servicing is the single biggest driver of retention, with 76% of repeat buyers staying with the dealer servicing their last car.
Used car customers who are offered a service plan but do not buy one will still use the dealer for servicing (69%). This falls to 47% when a service plan is not offered.
