There is a serious shortage of used cars because new registrations have been depleted during the economic downturn over the past four years.
But franchised dealer groups have been dispatching sound trade-ins to auction instead of sprucing them up as a forecourt profit point.
This policy is changing and, as more dealers retain part-exchanges wherever possible, they see a growing F&I potential: boosting finance on used cars is seen as a growing priority by smart dealers.
People who can’t afford to buy the model of car they want new are surely at least as likely to require funding assistance on a used unit.
But Adrian Foster’s research reveals many dealers are allowing valuable used car finance revenue opportunities to literally disappear.
Foster is operations director and co-founder of Remit F&I, which sees great potential in training showroom staff to guide sales enquiries safely from receipt to signed contract.
“Our research shows that 20% of finance enquiries are lost within the dealership, and that applies as much to used car sales as any others,” said Foster.
“So those enquiries never have a chance of conversion. Dealership staff tend to react to something that crops up and then fail to ensure the enquiry is tracked all the way through.”
Foster said too many dealers fail to realise the way people buy used cars is changing, certainly for anything ‘above Honda’.
Buyers prepared to travel
“For a prestige or premium car, or something that’s a bit rare or unusual, buyers are prepared to travel 150 miles,” he said.
“These buyers tend to organise finance first, which makes it harder to sell them a loan.
“So as soon as someone in sales is engaging with a potential buyer they should make sure the business manager is involved.
“Then a colleague can call the customer with a ‘this is what we can do on finance’ call and try to get their interest in a loan.
“If nothing is done until the buyer arrives a week later to collect the car, it will be too late.”
Lenders report variable professionalism among franchised dealers in trying to sell finance on used cars. Nigel McMinn, managing director of Benfield Motor Group, said: “I’m not claiming we are a leader in the field, but I am sure some other dealers do not handle it the way we do.”
That may well be so because up to 90% of Benfield’s used cars are sold on finance, as new cars are increasingly taken on PCPs.