There is no doubt that the whole industry was waiting for these price reductions. Franchised dealers, independent used car specialists, customers all knew it was inevitable. Customers, in particular, were prepared to wait.
A spate of company finance results over the past few weeks has given dealer bosses a chance to warn their shareholders of just how tough the market has been. One finance director described trading as “the worst I have ever known” and we all know about it.
The problem was not confined to new car sales. Used car business has been slow too. Uncertainty unsettles the market and, unless you absolutely had to change your car, there was no reason to buy. The question is what happens now.
For sure, nobody is expecting a quick fix. Customers coming back into the market now will be taking their time and will need to be handled carefully. Many will be thinking about waiting until the start of the new year before actually taking delivery – even if they are prepared to close the deal before Christmas.
Their focus of attention is bound to be on the list price. Buyers want to know if the price has come down and how it compares with continental Europe. In essence, they want to know how much they can save.
Of course, it is not as simple as that. The key question in sales is how much people can afford. Here the two elements of the cost to change and a good, well structured finance package will be crucial.
Part exchange prices have fallen. Indeed some customers are finding it hard to come to terms with the low value being offered on their existing car. So they need to be helped to bridge the gap – or they will walk away.
The finance plan you offer becomes crucial. Make the car affordable, bridge the gap in the customer's mind and close the sale. Sounds simple, doesn't it.
Almost a year ago, when the whole issue of new car prices was first raised, there was much talk of 'unbundling' – taking away the subsidised finance and free insurance in order to offer customers a simple, lower list price. That has not happened.
Despite having taken 10% to 12% off list prices, Ford, Vauxhall and others are still offering promoted finance on selected models. The carmakers recognise the importance of making the car affordable above price cuts; above new models; above advertising; above all else.
So finance, good finance, is just as important as ever. Here at Chartered Trust we understand that message too. With our flexible and bespoke approach to finance plans, we can create packages to suit individual local markets and specific business targets. It's all part of our philosophy of being Reassuringly Different.
Talk to your local Chartered Trust representative. They understand your market – and will work harder than ever to help you through the next few months.
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