New car sales in September hit record levels and all the evidence shows dealers worked hard to achieve their targets, despite the downturn in customer demand in the second half of the month. In fact a shortage of stock means many new car orders have been carried through to this month, helping to bolster the official figures again.
But the retail trade knows that statistics do not always reveal the true picture. The number of fresh customers placing orders has dropped away dramatically and used car activity is patchy.
Even without this downturn in demand, record new car sales just before the onset of winter would have brought fresh challenges for the used car market. The September plate change means a boost to the flow of part exchanges just at a time when demand is naturally dropping away.
This year, the quality of part exchanges has been poor, stock levels are low and many dealers are already beginning to look ahead to the new year. But that does not mean there is no business to be done – it simply means each sale is more important than ever. Each customer must be converted and every conversion must be maximised for profit.
In the grey days of winter it is all too easy to let customers walk. So it is important to make sure sales staff are motivated and ready to treat every enquiry as a possible sale.
The basic skills of qualifying customers and selecting the right stock should be second nature. Equally important is the ability to quote total monthly payments which include finance and insurance – thus offering added value and convenience for the customer while increasing business for the dealership.
The greatest threat to dealer business in finance continues to come from the direct lenders, with heavy advertising budgets and nationally known brand names. More and more customers believe they can get a better motor finance deal in the high street than in the showroom. It is simply not true.
Of course there is strength in a brand name. Black Horse is one of the strongest and most instantly recognisable in the market. So having the support of Black Horse is an immediate advantage when offering a finance solution.
But motor dealers, both new and used, have many other strengths to play on. No direct lender can offer the customer a 'done deal'; which means they can find the car they want, arrange the finance and complete the sale all on the same day.
No direct lender can make an allowance for the part exchange vehicle and take that into account in the finance transaction. Indeed, no direct lender can guarantee the future residual value of a car and use that to reduce the monthly payments.
Finally, direct lenders may appear to offer highly competitive rates but often they are only headline figures. Motor retailers have the ability to offer a highly competitive rate to suit a range of customers and get them into the car they want.
Come and talk to us at Black Horse about how we can help; not only to revisit your approach to qualifying finance customers but also to benefit from training courses specifically designed to address the impact of direct lenders on your bottom line. (October 22, 2001)