There is no doubt that 2021 is the year of the used car for the motor industry. With lockdowns hopefully behind us, dealers are cracking on meeting strong demand from consumers, many flush with savings thanks to cancelled holidays and restrictions on their social lives.
Indeed, Britons built up their savings to the second-highest level on record at the start of the year, according to figures from the Office of National Statistics. The spending power is driving a strong bounceback in the economy, which is forecast to grow by 7.1% this year by the British Chambers of Commerce.
With the ongoing disruption to the supply of new vehicles, dealers are meeting demand with used cars, which in turn is causing unprecedented rises in values as wholesale volumes remain low. According to Cap HPI, prices have risen 26.3% since April.
Data from Dealerweb shows September saw demand in the used market continue to decline with a 9% fall in enquiries and a 4% drop in orders against the same month in 2020.
The news followed a slowing of the market in August, which saw demand in the used market decline with a 6.6% fall in enquiries and a 1.5% drop in sales, while the average value of used vehicles sold increased 15% from £19,058 to £21,903.
In this market, it is essential to stay closer to the customer than ever before. Buyers will be shopping with multiple retailers to find their ideal used car and will likely be undertaking multiple test drives.
When the UK emerged from the first lockdown, data from Dealerweb showed that part-exchange appraisals increased by nearly 1,000% and almost recovered to 2019 levels.
Demonstrations also rose significantly between early May and early June, with an increase of almost 8,000%.
Monitoring customers from first enquiry to demonstration and offer is essential, and a higher frequency of contact is advisable in the current market.
Finance is also central to the sales process.
An attractive, used car finance rate that can deliver a low monthly payment will generate more clicks and enquiries, and ultimately, more sales.
According to the FLA, consumer used car finance saw volumes up by 6% in June compared with the same month in 2020, while the value of new business grew by 9%. Used car finance continues to lag behind the new sector with headroom for growth.
A study by Hitachi Capital Motor Finance showed that 80% of consumers said offering finance heavily influenced their decision to buy from a specific retailer, with 48% spending more as a result.
Once the customer has enquired, they expect a quick response, and data shows that a prompt response is crucial for sales conversions.
Research suggests that the majority of customers expect a reply to a web lead in under an hour and almost all customers in under three hours.
As dealers are continuing to see an increase in enquiries from online channels for used cars, it is vital that great value used car finance offers are integrated into marketing activity and the sales process.
Engaging the customer in the sales process will also deliver results.
The Dealerweb Deal Builder weaves customer interaction into the purchase process. It can then be professionally finished off with fully automated and well-presented documentation, including offers and vehicle order forms, in a few clicks and ensures FCA compliance.
In a volatile market with ever-tightening margins, it is essential that the value of every pound spent on marketing and sales is maximised. The data is available to build a detailed view of each customer and closely monitor where they are in the purchase process.
In a tough market, it’s vital to be closer to the customer than ever before and provide a prompt service that works seamlessly in the showroom and remotely.
Author: James Hill is managing director of Dealerweb