Selling cars or vans is a solid business, but it often requires high sales volume due to the lower profit margins. Motorhomes offer significantly higher margins, making them a more lucrative option for your dealership.
How do motorhomes have a better profit margin than cars?
Higher Price Point: Motorhomes can be significantly more expensive than cars, with prices ranging from tens to hundreds of thousands of pounds. Higher price points can absorb higher markups while remaining competitive.
Customisation and Add-Ons: Motorhomes offer more opportunities for customisation and add-ons, such as premium interiors, advanced electronics, and specialised equipment. Dealers can charge more for these features, increasing the profit margin.
Niche Market: The motorhome market is smaller and more specialised than the car market. This niche market often has less price sensitivity and more willingness to pay for luxury and specialised features, allowing for higher markups. Some models may be a 1 of 1 in the UK, meaning you can dictate the prices.
Book Price: With no book price by the end of 2024, dealers will be able to control the prices more. They will look online to see comparisons and base it from there.
Lower Volume, Higher Margin Strategy: Motorhome manufacturers and dealers often operate on a lower volume, higher margin strategy. They sell fewer units but make more profit per unit compared to the high volume, low margin strategy typical in the car industry.
Higher Dealer Service and Maintenance Revenue: Motorhomes require more specialised service and maintenance than cars. Dealers can earn substantial revenue from these services, contributing to overall profitability.
Perceived Value and Lifestyle: Motorhomes are associated with a particular lifestyle and perceived value, which can justify higher prices. Buyers often pay more for a motorhome’s comfort, convenience, and luxury.
Limited Competition: The motorhome market has fewer competitors than the car market, allowing manufacturers and dealers more pricing power and better margins.
These factors combine to create a situation where motorhomes can command higher profit margins than cars, making them a lucrative product for manufacturers and dealers.
How much does it cost to buy from Auction?
When you buy a motorhome with BCA, you must pay a fee. The cost varies depending on the value of your purchase, ranging from £400 to £900 per vehicle.
Do you need to hire specialised sales people with experience in selling motorhomes?
Not necessarily. While having specialised salespeople with experience selling motorhomes could be beneficial, it’s not always required. Here are a few key points to consider:
- Product knowledge: Existing car salespeople can be trained on motorhome features, specifications, and selling points.
- Transferable skills: Many sales techniques used in car sales apply to motorhome sales.
- Customer base: Your current customers might be interested in motorhomes, and your salespeople already have relationships with them.
- Training: You can provide specific training on motorhomes to your current staff.
- Expert support: Consider having a motorhome specialist available for complex questions or final negotiations.
- Market demand: The need for specialised staff may depend on the volume of motorhome sales you anticipate.
If you start selling motorhomes regularly, consider hiring a staff member with expert knowledge and experience. This will give your customers the feeling that they are in safe hands when buying from you.
What additional service bays, equipment, or specialised tools will you need for motorhome maintenance and repairs?
It’s not always necessary, but something to consider is adding to your existing service capabilities. Here are the key areas to consider:
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Larger service bays:
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- Taller and longer bays to accommodate motorhomes
- Reinforced flooring to support heavier vehicles
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Lift equipment:
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- Heavy-duty lifts capable of supporting motorhome weight
- Possibly mobile column lifts for flexibility
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Specialised tools:
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- RV-specific diagnostic equipment
- Tools for working on propane systems
- Specialised equipment for handling larger engines (diesel, etc.)
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Electrical testing equipment:
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- For both 12V DC and 120V AC systems
- Solar panel and inverter testing tools
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Plumbing tools:
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- For freshwater, grey water, and black water systems
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HVAC equipment:
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- For servicing roof-mounted air conditioning units
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Awning repair tools
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Hydraulic levelling system service equipment
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Slide-out mechanism repair tools
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Generator service equipment
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Towing and recovery equipment:
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- Larger tow trucks or arrangements with specialised towing services
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Safety equipment:
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- Fall protection systems for working on motorhome roofs
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Paint and body shop upgrades:
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- Larger paint booths if offering full body repairs/repaints
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What are the specific licences, permits, or regulations you must comply with to sell motorhomes?
To sell motorhomes in the UK, you must comply with several specific regulations and obtain certain licences. Here’s an overview:
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Motor Vehicle Dealer’s Licence:
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- You likely already have this for your car dealership, but ensure it covers motorhomes.
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Consumer Credit Licence:
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- Required if you offer finance options for motorhome purchases.
- Regulated by the Financial Conduct Authority (FCA).
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Vehicle Type Approval:
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- Ensure all motorhomes meet UK and EU type approval standards.
- This includes compliance with emissions regulations.
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MOT Testing:
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- Motorhomes over 3 years old require annual MOT testing.
- If you plan to offer MOT services, you’ll need approval from the Driver and Vehicle Standards Agency (DVSA).
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Trading Standards Compliance:
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- Adhere to regulations on fair trading, pricing transparency, and consumer rights.
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Data Protection:
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- Comply with GDPR for customer data handling.
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Health and Safety Regulations:
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- Ensure your premises and practices comply with H&S regulations, especially considering the larger vehicles.
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Insurance:
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- Adequate insurance coverage for higher-value motorhome stock.
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Waste Carrier licence:
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- If you’ll be transporting waste from motorhome servicing.
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Gas Safe Registration:
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- If servicing gas appliances in motorhomes.
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Advertising Standards:
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- Comply with regulations on motorhome advertising.
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Vehicle Excise Duty (Road Tax):
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- Understand the different rates for motorhomes based on emissions and first registration date.
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Consult with local authorities and possibly a legal advisor to ensure full compliance, as regulations can change. Would you like more information on any specific area?
What are the insurance requirements and liabilities associated with selling and servicing motorhomes?
Due to their higher value and specialisation, insurance requirements and liabilities for selling and servicing motorhomes in the UK are more extensive than those for standard vehicles. Here are the key areas to consider:
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Motor Trade Insurance:
- Road risks cover (for driving customer vehicles)
- Premises cover (for vehicles on your property)
- Higher indemnity limits to account for motorhome values
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Public Liability Insurance:
- Covers accidents or injuries to customers on your premises
- Should have higher limits due to increased risks with larger vehicles
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Product Liability Insurance:
- Covers issues arising from sold motorhomes or parts
- This is particularly important if you modify or customise motorhomes
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Employers’ Liability Insurance:
- Legally required if you have employees
- Covers staff injuries or illnesses related to work
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Professional Indemnity Insurance:
- Covers advice given about motorhomes
- Important for protecting against claims of negligent advice
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Engineering Inspection Cover:
- For regular inspection of lifting equipment used for motorhomes
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Goods in Transit Insurance:
- If you transport motorhomes between locationsBusiness Interruption Insurance:
- Covers loss of income if business is disrupted
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Cyber Insurance:
- Protects against data breaches of customer information
Liabilities to be aware of:
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Consumer Rights Act 2015:
- Motorhomes must be of satisfactory quality, fit for purpose, and as described
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Sale of Goods Act 1979:
- Covers contracts for the sale of goods
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Supply of Goods and Services Act 1982:
- This applies to servicing and repair work
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Vehicle safety recalls:
- Responsibility to inform customers of any recalls
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Misrepresentation Act 1967:
- Liability for false or misleading statements about motorhomes
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Gas Safety (Installation and Use) Regulations 1998:
- Liability for ensuring gas systems are safe
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Habitation checks:
- Responsibility for thorough checks of living areas
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MOT testing liability:
- If offering MOT services for motorhomes
Working with an insurance broker experienced in the motor trade and specifically in motorhome sales is crucial to ensure you have appropriate coverage. Additionally, consider regular legal consultations to stay updated on your liabilities and responsibilities.
