5:16 pm, May 11, 2016
THE trend towards PCP finance in new car sales is now being replicated in the used sector, according to leading provider of vehicle service plans EMaC.
The availability of used car PCPs has seen dealers switch to the sales and marketing opportunity to help drive used car sales. It’s also proved to be the perfect opportunity to capture the lifetime value and retention opportunity afforded by a Service Plan.
Customers value the affordability and convenience such finance affords and Angela Barrow, MD of EMaC, believes that dealers need to extend this shift in behaviour to include servicing – wrapping car usage into a neat package that meets customer needs’ and supports enhanced retention and lifetime value.
She said: ‘At long last the average age of the car parc is coming down. Over the next three years, the supply of vehicles under six years old will continue to grow more rapidly than those over six years old, as the impact of the economic downturn fades, as consumer confidence grows and as PCP finance supports a shift in buyer behaviour from ownership to usage.’
New car sales, which the SMMT forecasts will hit 2.629 million new registrations in 2016 – of which around half will be retail sales – is a natural home for service plans. However, the greater opportunity for gains is in the used sector, where dealers will typically sell three times as many units.
EMaC’s benchmarking analysis indicates that, while new car service plan penetration is largely in the 50 to 65 per cent range, used car penetration lags behind, commonly below 30 per cent, with some dealers performing much lower.
Barrow added: fFranchised dealers need to adapt to the used car service plan opportunity, especially as used car PCP finance gains momentum.
‘Classically, customers all too often cease using the franchise service experience at the first MOT, with a service plan in place. This risk can be avoided and increased lifetime value gained, simply by creating a long-term bond with the customer through a service plan – a product that is intrinsically linked to the showroom.
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