Are you missing out on the upturn in used car finance?
The POS consumer used car finance market reported new business in July up 6% by volume and 13% by value, compared with the same month in 2017.
-FLA September 6th 2018
Great statistic and encouraging news for the motor retail sector especially since it is such a healthy leap. But to use a metaphor in an inappropriate season manner; ‘one swallow does not make it spring!’ The knack now has to be about sustaining this momentum.
Now, as a business full of tech geeks working to craft the code that we hope brings finance to life for would-be car buyers, we don’t get to spend much time in showrooms and so don’t see and feel the pressures that are on sales people. However, we can see things from the other side of the fence; we drive cars (well our office, smart though it is, is located off the beaten track).
So would we use finance in buying a used car?
Now, there’s around a hundred of us and yes, we may be a bit bias, but yes, we would. It seems like a lot less hassle than a getting a loan and with the right products we can get more car for our money, or pay out less each month. For a lot of our younger people, the latter is particularly important.
The key things our team want in finance is ease; they reckon they can already get a good idea on pricing (well it is what they do, but they are not alone in recognising that clear pricing for finance should be seen as a given).
So while the used car finance trend is on the up, the consensus is that most dealers could keep building upwards. This is not meant to be in anyway disrespectful, but other statistics tell us that nearly every private new car buyer used dealer finance, while only 30 – 45% of used car buyer take advantage of the opportunity.
One crucial insight from our team that may help; their search for a car (and they aren’t alone) starts with a monthly budget; if your advertising doesn’t display that then the odds on closing our team and presumably the many similar thinkers, just dropped.
I understand that for some finance is seen primarily as an extra profit opportunity, but really is it more important as a marketing tool?
So to finish, I guess the questions every dealer should challenge themselves with are:
- What is our used car finance penetration today?
- Do you we want to improve it?
- If so, what steps are we taking?
Finally, the FLA stats clearly shows that some dealers are improving; if it’s not you, then are you missing out on finance and car sales?