11:07 am, August 17, 2022
Dealers are being urged to rethink their customer propositions because of ageing used car stock and the cost-of-living crisis continuing to bite.
That’s according to the RAC Dealer Network, which said the trends meant car retailers needed to find ways of reassuring customers who were being offered older vehicles at historically high prices while their personal finances were stretched.
Lee Coomber, RAC sales agent director at Assurant, which partners with the RAC in the dealer and aftersales sectors, said: ‘We are now in the third year of much lower-than-usual numbers of new cars being sold, meaning that the average age of the overall parc is increasing.
‘This situation is unlikely to change soon, and it could even persist for several years. The used car stock profile for most dealers therefore continues to become older.
‘At the same time, while the substantial month-on-month used car price increases that we have seen in the past couple of years are no longer occurring, neither are they really falling.
‘This is happening against a backdrop where the increase in the cost of living is putting huge pressure on personal finances for a large number of people.
‘The sum total of all these trends is that car buyers are, for the foreseeable future, going to be asked to pay historically high prices for older vehicles at a time when they have much less flexibility to pay for unexpected repairs.
‘It’s a situation that alters the way in which consumers look at the overall used car proposition.’
He added that the RAC Dealer Network was having detailed discussions with many of its 1,200-plus members to see how their customer propositions could be modified and enhanced in response to the changing market.
‘Essentially, customers are looking for a high level of protection against the possibility of unexpected expenses, especially as they could be buying a car that is older with higher mileage.
‘The main tool here is to offer a more comprehensive and longer warranty, either as standard or as part of an upgrade path.
‘It’s important to realise that at times such as these, customers are very often actively looking and are willing to pay for higher levels of protection.
‘Warranties are, to a great extent, a countercyclical product that often sees strong levels of sales during times when economic conditions are difficult.
‘However, there are other important elements in rethinking the proposition.
‘Ensuring that each vehicle is prepared for sale to a high standard, as well as emphasising the comprehensive nature of each service history, for example, also has a part to play.
‘It is about providing as high a degree of reassurance as possible.’
There was also interest from consumers in other products that would help increase the affordability of vehicle ownership such as service plans, said Coomber.
