The media have made a great fuss in
the last few months that now is a great time to buy a car, but
they’ve done F&I no favours at all.

The message that is going out is: ‘If you have the
cash, now is the time to buy’ – a great way to generate footfall,
but one that is sweating out of suburban semis those conservative
types that have saved up the readies.

Yes, savers, those poor unfortunates that have
adjusted their lifestyles to below that of their earnings, those
that have sacrificed family holidays to Disneyland and replaced
them with a trip to the caravan in North Wales, those that have a
wedge of cash that is now sitting in ‘Panic Stricken Bank plc’
earning fourpence ha’penny a month.

So, here we are with our customers, they have a
lump saved, and they are in the showroom ready to spend. I can
guarantee you they really do not want to spend it, but the time has
come to replace their ‘Old Faithful’ with a new, bright and shiny,
gleaming model with more than four forward gears and one of those
integral CD thingummies. The scrappage scheme is tempting even more
of these people out of the woodwork.

The only reason they are here is they believe the
time is right for them to get the best deal out of you, and they
believe that involves them spending their cash pile. It is down to
you and your teams to persuade them otherwise – but the traditional
methods based on rate for rate just do not work any more.

New paradigm

We used to do comparisons on the basis of
a cash conversion, compounded interest on savings against simple
flat annualised interest over the life of the loan – and do not
mention the f-word, “finance”, it brings savers out in a rash!

Thing is, we can’t do that calculation right now,
as savings rates are on the floor – we need to look at an
alternative, and to do that we need to understand why customers

Security. There, I said it.

The essence of a cash conversion to dealer funding
is no longer about the hidden cost of the lost interest on their
money, nor is it about the aspects of the CCA that many dealers
have exploited over the last few years (halves and thirds anyone?)
no, it’s about the significance of that lump of money sitting in
the bank.

Your customer needs to replace their old smoker
with a new(er) one, check.

They know that now is the best time to buy,

They still don’t want to spend that lump,
considering all the compromise and sacrifice it took to build it up
in the first place, check.

Affirm that now is a great time to buy metal, but
reassure them that it is also a great time to buy money, too: the
rates are fixed for the life of the lend, they have the protection
of the CCA/DPA/FSA etc., and they get to protect some of their
investment too, just in case.

We do not know what is around the corner
financially for them or for us, but we do know the ride has not
finished just yet.

The author is director of Profit
Training Ltd