However, much of the manufacturer-supported finance, backed with deposit contributions and the like, leaves little margin for the retailer. “We could make more money if we were doing it other ways, but we can’t have it both ways. We want to sell the unit, but we want to earn from it.”
He sees FCA regulation as a headache. He understands why the FCA wants to put in regulation, after the harmful activities of the banks and payday lenders, but he is concerned about over-regulation impacting the benefits that customers gain from point-of-sale finance and fears the FCA does not understand the motor trade.
He questions whether consumers will happily answer questions in a dealership about their gross earnings and outgoings to determine affordability when they’ve been used to filling out an application and being credit-checked by the finance company. The outcome could be that the customer walks out to arrange their own finance elsewhere.
“At John Clark one of the things we’ve never done is put people into deals that they don’t understand,” he said. “The processes we have now are pretty prescriptive because what we do was controlled by the FSA in any case, so we are doing it by the book. It just becomes more complex now, adding some more bits and pieces to how you do it.”
‘The add-on is a key part of dealer profitability’
Clark’s dealerships take a pragmatic approach to upselling add-on products, given that the business’s focus is heavily weighted towards providing the right customer experience and Clark understands that customers’ disposable income has been constrained.
The group is not heavily engaged in insurance sales, except for GAP insurance, which Clark believes is valuable to the consumer buying a high-value vehicle and increases the profit in the car sale. His reluctance to offer other insurance products is due to the regulation – he doesn’t see the returns as worth the risk of being accused of mis-selling.
Its other key products in sales are paint protection, with which the group achieves 41% penetration, plus manufacturer service plans as a retention tool. In aftersales, all vehicles receive an electronic vehicle health check (eVHC) to identify any additional urgent work. As a result of this eVHC and all its dealerships offering tyres price matched against the major independent chains, the group has tyre sales penetration of 20%.
As editor, Tim is responsible for the media content, planning and production of AM's multiple channels (AM print and digital magazines, website, social media and contributing to our events planning). He interviews and writes about as many franchised dealer groups and UK divisions of motor manufacturers as possible, to explore the issues facing UK motor retail and understand what solutions dealers and suppliers are using to overcome these.
Busterrabbit - 20/11/2014 11:14
The PCP bubble will burst soon, PCPs haved damaged the sales (and therefore the RVs) of used cars and there will be hundreds of thousands of buyers in negative equity when they come to change their car, what are they going to do, cough up a few £000's and start again? I think that PCPs will soon be viewed as the "endowment mortgage" of the car industry, and the FCA will get involved, again. Talking of mis-selling, who needs paint protection with modern cars? It might make a car marginally easier to clean but is it worth upwards of £300? This type of upsell shows that customers' interests are not paramount, it's about maximising profit, whatever the PR speak.