Car dealers have returned to their showrooms and opened their doors once again this week – but what should bosses be concentrating on?
With the motor trade likely to look very different and many unknowns to plan for, Car Dealer Magazine has asked the experts what they think car dealer bosses should be concentrating on as they go back to work.
From used car prices, changing legislation to planning for a digital future, what should dealers be considering? Here’s what our experts told us.
1. Beware of rejections as they could be coming
‘Dealers need to be vigilant, act diligently and stay alert themselves,’ said Joel Combes, boss of motor trade legal firm Lawgistics.
‘Since lockdown restrictions have been relaxed, it is clear that the consumer is as keen to buy as the dealer is to sell and there is a definite positive atmosphere in the trade. However, we are already seeing a spike in the number of cases from consumers seeking rejection of their car or demanding some alternative form of compensation.
‘Dealers must qualify customers correctly, document pre-delivery inspections, make sure all paperwork is completed and any agreements are signed.’
2. Be prepared for the pent up demand
‘The reopening of showrooms in England this week marks a very important step in the road to recovery, and with an average 1.7m visits to our marketplace every day, there’s clearly pent up consumer demand,’ said Auto Trader’s Marc Thornborough.
‘However, there’s also a limited supply of vehicles for sale in the market, so don’t be tempted to drop your prices to entice car buyers – there’s simply no need to do so.’
You also need to start concentrating on other crucial areas of your business, like the workshop.
‘Build up capacity in aftersales as there appears to be a lot of pent up demand,’ added Zeus Capital analyst Mike Allen.
3. Don’t rush to change used car prices
‘Now dealers are fully open the consumers will come back,’ said Rupert Pontin of Cazana. ‘Therefore, don’t rush to move the retail pricing downwards on your websites and forecourts.
‘Hold firm and use daily retail-based pricing insight to understand the trends and maximise margin.
‘Remember, too, that you may not be able to replace the car you have on sale today as auctions are not yet up to speed and demand may outstrip supply.’
That’s a view echoed by CAP HPI.
The firm’s Derren Martin added: ‘The market is likely to be volatile in the short-term, with prices potentially moving in either direction before they settle down. Use Live valuations.’
4. Don’t forget your digital future
‘Don’t let being back in the building detract you from the digital future your customers want,’ said Steve Fowler, editor in chief of Auto Express.
‘There’s definitely a place for dealers in our bold new future, but it has to be as part of an even greater digital sales model.’
Karl Werner, deputy CEO at MotoNovo, agreed, adding: ‘Short-term survival may be a priority, but the shift to online buying and the lingering Covid-19 situation have changed the entire retailing landscape.
‘Dealers need to reinvent their model. Creating an engaging digital car buying experience, getting leaner and closer to their customers’ needs should all be on the agenda.’
Lance Boseley, of JewelUltra, added: ‘The way people purchase cars was already changing and the lockdown will speed up that process. Customers will expect, if not to purchase cars online, to be able to communicate with the dealers remotely.
‘Virtual test drives and remote service videos will become normal. The only dealers that survive will be the ones that adapt and do it quickly.
‘Before the lockdown there was some room for error, now there isn’t.’
5. Being prepared to make BIG changes
‘Breaking a business model that has worked feels uncomfortable, where people know their roles and where results have been financially sound is not easy,’ said finance firm Mann Island’s boss John Hughes.
‘This can be especially true if the business leadership has been in place for some time and where frankly, change can seem scary and risky.
‘A deep, profound change, the type that can make a real difference, rather than simply tinkering often means making uncomfortable decisions. However, avoiding the change that you know deep down ought to be made can have a cost – it can be the road to a terminal decline.’
6. Put the customer at the heart of what you do
‘Ensure your team are aligned to the expectations and needs of the customer,’ said Ali May-Khalil, boss of Sentience Automotive Solutions.
‘Take your time and put the customer at the heart of the process. Work with them to find a solution, facilitate the sale, and use all available methods to do so – from telephone, Zoom to WhatsApp. Create a great experience, one based on transparency and trust, that helps the customer to buy.’
7. Bring staff back when you need them
‘I seem to be having quite a few conversations currently where the accounts and back office teams are really struggling to keep up with the processing,’ said UHY Hacker Young accountant Paul Daly.
‘Understandably, the operators are reluctant to unfurlough too many in case the demand isn’t there, but I guess the main thing is to ensure the operator responds appropriately if they have genuine concerns in this area. If they get too far behind it can be a real challenge to sort out and very costly to the business.’
8. Get the Covid-19 matters right… and the basics
‘Get all the Covid matters right, but also make sure your sales staff are on top of the everyday important issues like providing 14-day return paperwork if the sale could be deemed a distance sale,’ said Nona Bowkis, a solicitor at Lawgistics.
‘You do not want to inadvertently give a customer free reign to return a vehicle in six months’ time.
‘Get the pre-delivery documentation in order to help protect against unreasonable rejections, keep details of who is test driving your vehicles to avoid picking up liability for speeding fines, and be sure your general sales paperwork is all in order so that the ambulance chasers do not come after you.’
9. Make sure your policies are socially distant compliant
‘Make sure your processes align with your social distancing policy,’ says Automotive Compliance director Paul Speakman.
‘Review and understand where there are potential coronavirus hotspots, to reduce the risk for exposure inherent in a traditional paper-based processes.
‘Consider how you make this contactless and can substantiate and evidence compliance, from finance suitability to purchase decision and handover.’
10. Educate the customer on the benefits of upsales
‘Now, more than ever, car buyers will be more price sensitive, with many seeing their income reduced during the past couple of months, so paying an additional cost for a warranty maybe seen as unnecessary,’ said WMS Group’s Malcolm McIntosh.
‘Dealers need to educate the customer of the real value of the warranty and the protection it provides. The cost is significant, but the cost of a mechanical or electrical failure could be even more expensive.’
11. Make sure you’re covered
‘Insurers will expect automotive businesses to be compliant with legal obligations, including the duties of the Health and Safety at Work Act 1974, to protect the health, safety and welfare of their employees and others affected by their operations,’ said Leon Bosch at insurance firm Gallaghers.
‘Indeed, in the present climate the duties owed to employees and others are enhanced. All activities must only be undertaken in line with the current guidance issued by HM Government.’
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