Peter Cooke discusses the impact 1 in 5 Britons living to the age of 100 will have on the industry.
The government has predicted that almost one in five of the current population will live until they are 100. Heaven forbid that we’re all driving at that age, but the prediction does indicate a market segment with growth potential.
It’s becoming a truism that ‘people increasingly don’t retire at 65, but start a second or third career’.
A straw poll among a group of my friends suggests that none of them intend to retire. ‘I’m too busy to retire – I’ll just change direction – daytime television is enough to make anyone keep working’ was the consensus among them.
What plans has your dealership or finance operation in mind for this sector? And what’s your interpretation of the changing demographic situation?
A few years back, it was assumed the bulk of disposable income was tucked away in bank accounts held by the over 55s who were looking forward to a relatively hedonistic twenty years or so.
That demographic group is now beginning to pay more attention to the long-term financial future. Its members are seeking to ensure they will be able to retain a decent standard of living for the foreseeable future – and for a growing number, under present rules at least, that could be approaching half a century.
When the state pension scheme and retirement at 65 were first introduced, the expectation was that retirees would enjoy five or so years of leisure before kicking the bucket. Even thirty years ago a ‘good innings’ meant perhaps 10 or 12 years in retirement.
So how might the debate regarding pensions, longevity and the provision of personal mobility develop – and what should your business do to embrace any developing opportunities?
Perhaps the first issue is not to assume that every snowy-haired customer coming into the dealership has, or is about to, retire. The second issue might be to check how, if at all, the customer plans to retire. Simple questions – complex answers.
A number of people in the ‘not really retiring’ category may have received company cars for the past 30 or 40 years and may be totally out of touch with the process of acquiring and managing a private car.
That said, they may have previously acquired a car for the spouse or the kids. And there again, maybe the spouse sorted her own car out – or the children have long since flown the nest.
The switch from a company car to a self-provided car for a ‘not-quite-retired’ business, might offer the dealer, through the F&I manager, an interesting new profit opportunity which may lead to a number of car changes over time.
There are a wide range of issues which the ‘not really retiring’ driver may need to consider and which may best be provided through the dealership.
Vehicle type is an obvious one so we’ll not dwell on that. However, car finance is an interesting one. Is that person starting his or her own self-employed business? What are the finance options for a vehicle for a one-person new business?
Certainly a person with a 20 to 30-year managerial track record solidly backed by assets may prove a very different proposition to the conventional start-up finance request.
Would you be able to help? – do you have an off-the-shelf plan available? While the predicted business revenue might be relatively small, there may still be tax advantages that person can claim.
As important, if not more so, is the insurance situation. There can be all sorts of complications about the use of a private car on business and the use that is covered.
Once again, advice may lead to an ongoing insurance policy sale and, of course, age and driving history may further lead to a tailoring of the policy.
In the short to medium term, this might be regarded as a fringe market – a specialist segment, but with the way that competition is developing in every industry, the more tightly you can define a potentially profitable niche in which you can develop expertise and a reputation, the more robust the business can become.
Food for thought.