News

29 April 2009 Dealerships missing lucrative opportunities

Car Care Plan research sheds light on used car market

As the credit crunch bites and the motor industry outlook appears increasingly gloomy, Car Care Plan, the UK's leading car warranty provider, paints an encouraging picture for franchised dealerships nationwide.

Car Care Plan has undertaken an in-depth study to uncover insight into the used car market. By researching 20 dealers and 500 consumers, Car Care Plan unveils some promising trends which the motor industry is seeing and offers fresh insight into new, potentially lucrative opportunities for dealers.

Appeal of franchised dealers

Despite the perceived higher cost of purchasing used cars through a franchised dealership, Car Care Plan found that over half (55 per cent) of consumers buy vehicles from a franchised dealer as a result of them offering a warranty and because of the assurance that comes when purchasing a car from a manufacturer approved outlet.

What's more, dealerships reported that nine out of ten consumers selected a warranty when they purchased their current car, proving the value that warranty products hold for motorists looking for peace of mind and confidence in their vehicle.

Philip Morrison, Head of Corporate Sales for Car Care Plan commented on the results: "It's encouraging to see that the majority of customers specifically purchase their vehicles from franchised dealers because of the warranty cover and assurance this provides.

"Despite the economic climate, motorists want to feel assured that their vehicle is in good hands which gives franchised dealerships an unrivalled advantage. Offering value added products, such as warranties, could potentially be a lifeline at this difficult time."

New opportunity for dealerships

The survey also revealed another interesting opportunity for dealers.

The research unveiled that 69 per cent of cars sold by dealerships are under three years old and only six per cent are sold over five years old. As consumers seek value during the recession, perhaps there's an opportunity for dealers to maximise their profitability by offering older vehicles.

Philip Morrison explained: "New cars will continue to be a priority for dealers, but perhaps this is a lucrative opportunity.

"The research highlighted that many dealers are not offering vehicles over three years old, and we found that many dealerships are happy with this. However, used cars over three years old and even over five years old could be much more affordable for the consumer at this time and by including these vehicles on the forecourt, dealerships could appeal to a wider market to help bolster their revenue.

"Our research did find that some smaller outlets are considering increasing the proportion of older vehicles so perhaps it's time for franchised dealerships to follow suit."

Customer retention through servicing

The study also found the value warranties can have in helping to improve customer retention.

More than a third of dealers can identify used car customers returning for servicing after purchasing a warranty, bringing in key revenue through the workshop. However this does mean that two thirds of dealers are missing out on the opportunity.

Servicing can be an effective way to build relations with customers, and also bring additional revenue through potential repairs.

Philip Morrison commented: "Although selling cars may remain the core business, now really is the time to think about customer retention and unrivalled customer service should be a priority. Those customers that continue to return to the dealership for servicing are more likely to come back once they're in a position to replace their vehicle when the upturn comes."

The research highlighted that the perceived cost means that consumers are reluctant to have their cars serviced, yet having warranty cover can take away the worry of repair costs that the motorist may not budget for.

"With this in mind, franchised dealerships are in a strong position with motorists and it's essential for dealers to maximise their revenue through all channels at this time," concluded Mr Morrison.

For media enquiries, please call Sally Barr or Jessica Davenport, Brahm PR on 0113 2200536 or 0113 2200505.