At the end of 2014, RAC launched a consumer provenance check to compete with market leaders HPI. Just over one year later, the company has revealed a dealer Car Passport to complement this. Jonathan Minter spoke to Robert Diamond, managing director of Motoring Services at RAC, about the new product.
Could you give me a bit of background on your new Car Passport for dealers?
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Undoubtedly the biggest market player in this field is HPI. We spoke to dealers; we heard a number of criticisms of the products out there at the moment. They felt they were expensive, they often felt pressured to buy a lot of add-on products alongside the core product. In addition they found that the report itself was not particularly friendly and that it was a sheet of A4 with some plain text on it. It was therefore essentially a cost centre for the dealer: it cost them money but there was nothing really they could do with it. It just took away the negative of questioning stock provenance.
So what we’ve done is start with these themes, and looked to build an identical product to the existing providers in the market place but with the RAC brand, which is known by dealers and end customers, and deliver the report at a more attractive price point.
So you knew you wanted to be cheaper. How did you work out the price point beyond this? Will it still be profitable?
It will be. The context for this is that we launched our consumer passport in December 2014. HPI had been the market leader for a number of years, but their product is £19.99, and the RAC came out with our product at £14.99.
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By GlobalDataWhat we wanted to do was to offer better quality at lower prices, and that’s the philosophy we’ve brought into the dealer space.
What lessons did you learn from the launch of the consumer product in 2014 that you’ve used here?
We have learned a lot about what to do, but we have probably learned even more about what not to do. And one of the things we have learned not to do was overcomplicate things. So we’ve made sure, we’ve got an easy to use website where dealers can order and view reports either on pc or mobile devices. They can store and retrieve past reports, so they no longer need to print them off and keep them in the desks – it’s stored electronically. And they can refresh reports for free within a 30 day timeframe.
What we’ve also brought with us is the awareness of the RAC brand name, and the commitment to the quality of the product – using the right data the right way, and backing that up with an insurance guarantee.
What add-ons will you have?
We’ve really focused on the core product. One of only two things the dealers asked us for was additional insurance. So every data check is backed up to a value of £10,000. We were asked to offer competitive rates of cover above £10,000, which we’ve done.
And we were also asked to include an independent valuation from Glass’s, which we’ll be introducing later in the year.
These were the two things dealers asked us to do, and the two things we will be doing.
What was the inspiration to launch this product now?
A couple of reasons. One is where we were within our business. We wanted to launch consumer passport first, because RAC is predominantly a consumer brand name, and we wanted to learn from that before we committed to the dealer product.
A second reason is that RAC is increasingly offering a range of support services for dealers, and we saw this as a natural compliment. So we have our RAC approved dealer programme which covers both RAC presence on the forecourt in terms of branding, but also allows some dealers to offer our buy shield warranty product. We wanted to have that in wide spread distribution, before we offered car history check on the back of it.
What do you want to achieve in Year one?
We estimated the market for dealer checks in the UK is 15m checks a year. How we got to that figure is essentially that there are well over 2m new vehicles sold each year and about 9m used vehicles sold each year. Of that 9m, about a third – so almost 3m – are sold person to person. So that means someone would advertise on eBay or a newspaper. Of the other 6m, about 1m is auction stock, which is typically fleet and leased vehicles being sold through.
The remaining 5m are dealer to dealer or dealer to end buyers, and that’s the space our car passport for dealers is aiming at. Of that 5m, many vehicles are checked more than once, and that leads us to estimate that the market size is about 15m checks a year.
Of the 15m, in year one, we’d be looking to target about 5% of the market in 2016, and then doubling that to a double digit presence in 2017.
You mentioned making the reports more attractive. How did you go about doing that?
Our dealer report is a very consumer friendly report. On the cover page it has a series of big alert buttons, so dealers can easily check if there are any alerts they should know about the vehicle. And then on the next pages it has a detailed description of the vehicle make up, which takes them through make, model and year. It describes the features of the vehicle. The third section then goes through any alerts in more detail. So it talks about any outstanding finance, who the finance policy is held with, the company, the amount and when it is due to be paid off. And it will give a phone number to call the finance company if the dealer wants to check.
Are there any other ways which you are looking to distinguish between yourselves and the competition?
The thing I come back to is the brand. RAC is the oldest motoring services brand in the world, it’s nearly 120 years old, and we have over 9m individual and corporate members in the UK.
How do you go about developing a product such as this?
What you do at the beginning is gather a set of user requirements. So we went out and met with dealers. We have almost 1,000 dealers in the RAC approved dealer scheme, so this allowed us to go and talk to a lot of people, and understand what works for the market at the moment, and what we could do differently.
We then turn that into a technical requirement specification and that broadly has two audiences . One is for our data team to make sure we can source and deliver all of the data that is required 100% of the time in real time. We also give it to our technical development team, who scope out the report itself, which is rendered both as an HTML report on the screen, and then is captured as a pdf as well. We’ve got to specify the report and then the website as well, which is the ordering portal and the place in which past reports are stored.
So you get to a set of data requirements and technical requirements. You then manage the design, build and testing of that process, and then you’ve got to sell it. So we looked at our ‘to market channels’, which are our RAC approved dealer network, other dealers where we have a trade relationship with through RAC cars, and we also have the opportunity to go and speak to some the larger accounts with our relationship with the Warranty Group.
