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Finance analysis: The extras that can help fill the profit gap during tough times

You’ll already be more than aware of the tough economic climate and how everyone is experiencing a most challenging sales period.


What’s more, despite the well publicised liquidity problems of some financial institutions due to the credit crunch, there are still plenty of low-rate personal loan offers to tempt consumers to fund their next car purchase from someone other than you, their dealer.

However, every cloud does have a silver lining.

The current economic uncertainty gives dealers the chance to sell many of the highly profitable add-on products such as Payment Protection Insurance (PPI), GAP and warranties – especially to customers buying a used car.

The selling of PPI has recently been under the microscope. Some dealers are no longer FSA registered and others appear reluctant to sell it, apparently in case they jeopardise the sale.

Our research and statistics show that many of your customers will buy PPI if it is offered. Just make sure you correctly qualify and identify the customers’ need for PPI, as the FSA requires.

Last year Black Horse paid out a seven-figure sum in PPI claims. Some 61% of claims were due to accident and sickness and 23% of claims were due to unemployment.

The latter issue is a real one for all us at the moment.

A car purchase represents a major investment for consumers but also a major profit opportunity for you in these uncertain times.

Customers are keen to protect their investment against future uncertainty and your sales staff should be aware of this situation.

The excellent profit from PPI can offset the low rate offered to compete with direct lenders.

Add to this the convenience of arranging finance at the dealership and customers will be more open to dealer finance.

With fewer vehicle sales anticipated, the profit from F&I has never been so important.

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