T he motor industry has moved on. Forget the hackneyed stereotype of the shiny suited sales people, stalking the forecourt looking for a quick sale – let’s look at who car buyers really encounter. Dealer principals and business managers are encouraging sales people to understand and validate the needs of the consumer before any proposition is made, let alone a signature on the dotted line.
This maturity has been encouraged by the appreciation in the value of customer retention, the customer’s greater awareness of what offers are on the market, and with a growth in motor finance. This seems to have translated into a need to be compliant and has created transparency and fairness.
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Margins on both new and used cars are as challenging as ever, and this means that the overall value of the deal is vital – including the trade-in and appropriate value-added services. Today, motor traders are no longer just selling a car but crafting an overall deal that’s likely to involve a finance agreement, service plans and other schemes to help the consumer achieve a manageable monthly budget. However, this brings with it a whole new language and purchasing experience.
Car buyers now go through more of an interview process to help qualify their needs. In most cases, the potential buyer will have carried out their own research and it’s important that the dealer takes account of this and aims to validate and information rather that start from scratch. Sales people use the information gathered to be able to offer the most suitable deal for the vehicle that is both fit for purpose and affordable.
Interviewing your customer also enables you to ascertain what’s important to them and where they are in terms of their research, decision and timescale. However, explanation doesn’t mean bombarding them with jargon. Every customer should be able to understand what their commitment really is including upfront payment, monthly outgoings and the final settlement. And perhaps once this is determined then the final choice of vehicle can be decided.
This transparency is all part of the FCA’s principles-based approach to regulation and it has certainly helped improve how car buyers are perceived and treated. In fact, the strength of the customer relationship and their trust in the sales person has led to over 80% of new car sales being procured through finance in 2015. Dominated by PCP deals, it shows they are able to comprehend that it’s not complexity but flexibility that finance can offer.
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By GlobalDataPCPs are increasingly being applied to used cars too, as thinking shifts towards car usage rather than ownership. Car buyers can be confident they are spending money on a quality car in the medium term by displaying provenance checks alongside vehicles either online or in the showroom. Motor traders are looking for ways to address the challenge of making nearly new cars attractive in comparison to their brand new counterparts.
The trend we are seeing is people are taking more control of their financial situation. They may not so easily be swayed by the end of the month promotion unless it specifically meets their needs. There is now an abundance of comparison websites that enable people to calculate how much they can borrow, and afford on a monthly basis. This means the sales person not only has to understand and explain what they are able to offer in the showroom, but how they compete with other deals in the market.
As a result, the motor trader has to become a trusted expert in make and models, as well as in relationships and regulations. This can only lead to a better customer experience and a more prosperous industry. <
Andrew Ballard is principal consultant at Experian
