F&I Management & Training

Dealers need to ensure that they are meeting the expectations of customers who can no longer afford new cars following price rises and are buying used as an alternative, says Network Automotive.

The company points out that the prices of new vehicles have risen to historically high levels at a point in time when consumer confidence remains low, unemployment is an issue and salary increases have slowed or even stopped.

Colin Bruder, managing director, explained: "Developments over the last couple of years have increased the gap between what a customer might want and what they might be able to afford. Increases in the prices of raw materials and other factors have prompted manufacturers to raise new car prices substantially.

"What this means is that some customers entering your dealership can no longer afford to make the same kind of purchase that they might have made three years ago. Someone who previously bought new might now be buying a year old car.

"What dealers need to recognise is that these customers do not have radically changed expectations. The customer buying a six month old, 5,000 mile ex-demonstrator still wants that new car smell and a bunch of flowers on the back seat. People paying the same amount for less need to be made to feel special."

Bruder said that dealers needed to ensure these vehicles were as well presented as possible, that PDI inspections were diligently carried out and that all vehicle history, warranties and other paperwork were made available.

He explained: "This is something that is going to be even more important as the scrappage scheme ends. To some extent, it softened the list price increases of the last year or so but there is now a chance that the full implications of the £12,000 mainstream entry level hatchback will hit dealers - and that a used car is the only option for someone who would have been a scrappage customer."

Bruder added that the same kind of thinking also applied to the used market where stock shortages meant that model for model, used cars of the same age where now substantially more expensive than before the recession.

He said: "It is a similar situation. A customer whose last purchase might have been a three year old/40,000 mile car may now be buying at five years/60,000.

"What dealers need to recognise is that this car, which may be oldest to be found on many franchise dealer forecourts, still represents a substantial outlay for the customer. They need to feel that they are making a good deal for a quality vehicle and their business is appreciated. It is up to dealers to meet this need."