Dealers facing margin erosion from 'quick fix' workshop discounting

Dealers offering discounts on servicing and repair work risk trading customer retention for eroded margins and long term damage to their businesses, according to new research. 

Three-quarters of the 4,269 car owners polled for the forthcoming Bumper UK Automotive Aftersales Report 2024/25 said they expect dealers to offer an initial discount on the prices they quote for aftersales work.

When it comes to subsequent jobs over half (51%) expect the same level of discounts and nearly a quarter (23%) expect even larger discounts. Only 20% view such discounts as a one off offer.

Dealerships who fail to offer the same, or greater, discounts on subsequent visits run the risk of losing repeat business with 57% of respondents saying it would affect their likelihood of returning.

However, the research found dealers offering interest-free financing to spread the costs of bills were likely to have stronger customer retention rates, with 89% of respondents saying they were more likely to return to a dealer providing it as an option.

“Discounting can only ever deliver a quick fix as it erodes profit margins and once withdrawn can have a damaging impact on repeat business,” said Daniel Christie, Bumper’s Head of Sales.

“The research shows how interest-free monthly payment options deliver a more consistent long-term solution to winning business and then retaining customers, while delivering transparency and protecting margins,” he said. 

The research also identified that over a quarter (27%) of customers spent between £500-£1,000 on servicing and repair work in the last 12 months.

Higher and lower bills were equally balanced with 21% paying £250-£500 and 21% paying £1,000-£2,000. Bills totalling up to £5,000 were paid by just 3% of respondents.