Embracing reality
Author: Mike Edwards, Chief Sales and Marketing Officer
Credit to Ron Brooks’ group manager of strategy and innovation, Tom Slack, for his candid assessment of the challenges facing motor retailing.
Now is the time for retailers to demonstrate their classic agility, seeking marginal gains from new and established products and processes.
While the current challenges are not unique to the motor trade, I struggle to think of another industry that relies so heavily on a high value, (normally) depreciating asset that is hard to source and requires time/money to prepare for the market. Used cars have been the industry’s strength and driver of encouraging profit levels over recent years. However, as Tom observes, used car margins have been declining and the loss of around 2.1 million new vehicles between 2020 and 2022 points to a shift to older used stock.
Inevitably retailing older cars can mean higher preparation costs and a greater risk of post-sale problems. Such issues can then lead to Consumer Rights Act/Consumer Credit-related claims with the costs and reputational risk this can present.
Longer, high-quality warranties can be crucial in providing buyer reassurance, helping to mitigate post-purchase issues for the customer, protecting the dealer’s reputation, as well as profitability. There is also the opportunity for a more proactive approach to promoting extended warranties to enhance customer reassurance.
All warranties are not the same, and as required by the Consumer Duty, warranties must be clearly explained to the customer to ensure they understand its scope, as well as their responsibilities regarding a correct maintenance regime. This transparency is not the problem; it is the opportunity.
With a focus on marginal gains, promoted positively and explained in detail, warranties can play a more significant role in almost all retailers.
Read the full story HERE.