INSIDER: Cashback back?

Time 2:56 pm, September 25, 2008

34070mrg.jpgTHIS year’s sales are a concern for us all – but it is what’s going to happen next year that’s keeping manufacturers awake at night.

An insider at a major manufacturer admitted to us that 2009 will be the crunch year for manufacturers, as the effects of the financial crisis really begin to bite.

‘That’s when the effects of falling house prices will really start to dawn on people,’ they revealed. ‘Factor in tighter lending conditions, rising commodity prices and the higher cost of living, and we could be in for a tough time.’

Makers are already seeing clear evidence of changing buying patterns. Plain and simple, people are downsizing. From larger cars into progressively smaller ones (superminis are flying out of showrooms, we were told) – but also, where they stay within a model size, from large engines into smaller ones.

Previously the runt of the litter, smaller petrol engines in larger cars are starting to win favour – which is creating logistical and ordering issues for some. It also means the potential for deals to be struck on thirsty petrol versions.

Expect things to only increase here, once next year’s VED changes start to bite. It’s vital you study and understand the bandings carefully, to ensure you’re not stuck with high-CO2 stock that simply won’t sell.

Our insider revealed their manufacturer was keen to target retail sales, as naturally they were more profitable. Encouragingly, they were holding up this year, despite the market being down.

But they acknowledged things will be harder next year: they noted with interest that some manufacturers were already responding to this with the re-emergence of the cashback deal.

Could this be the trend of 2009? After all, money is tight. The lure of buying a new car on finance and, theoretically, getting a couple of grand in the bank to boot, is a very compelling marketing trick, that’s for sure.

Of course, it’s not that simple. Most will simply use the ‘cashback’ to fund their PCP depoist, or take the money off straight away. While there is, technically, the possibility of taking out a £15k loan against a £15k car offering £3k cashback, most banks will see through this ruse, too. Cashback is, in essence, a plain list price discount – but made much more exciting.

You thus read it here first: cashback could well be back…

Richard Aucock

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Car Dealer has been covering the motor trade since 2008 as both a print and digital publication. In 2020 the title went fully digital and now provides daily motoring updates on this website for the car industry. A digital magazine is published once a month.

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