Used car dealers are turning to complementary sales such as warranties, asset protection and paint protection as unit price margins come under pressure.
RAC Warranty says that current used car stock shortages allied to tough economic conditions mean that the profits available from the sale of each unit are falling – and that dealers are looking to restore their margin by putting much more effort into selling these 'extras'.
Ian Simpson, sales and marketing director, said: “Used car trade prices are remaining high because there is a shortage of stock but making increases to retail prices is difficult at a time when consumers are feeling the effects of ongoing problems in the economy.
"This means that the margin in each used car is much lower than it was even as recently as last year.
“As a result, dealers are increasingly looking to achieve profitability by concentrating on complementary sales such as upgraded warranties, asset protection and paint protection. This is a strategy that, if properly implemented, can produce good results.”
He said this approach required structured thinking on the part of the used car dealer, ensuring that each sales person had a thorough knowledge of the products they were selling, was properly trained and incentivised, and followed a methodical sales path that introduced the customer to each “extra” at an appropriate time.
Simpson said: “We are seeing dealers put much more effort into complementary sales and many are approaching us for help in ensuring that they have the right infrastructure in place to make a success of this element of their business."