Used car dealers generally fair poorly in mystery shopping exercises. The spotlight often falls on their failure to grasp the benefits of selling finance packages.

The consequences are two-fold: dealers surrender the sale as the consumer looks elsewhere for a car package that fulfils their needs, and they miss out on the profit from the finance deal.

Online Finance, the used car finance subsidiary of General Motors Acceptance Corporation, suggests the issue of selling finance is a cultural one: dealers have tended to focus on closing the deal, rather than the promotional tools to help them make the conversion.

Arnie Iversen, Online Finance sales and marketing director, said: “Car supermarkets have a strong finance offering because they recognise that it is a healthy way to secure and improve profits.”

The failure of dealers, particularly smaller groups, to exploit finance packages had opened the way for direct lenders.

“Customers are now coming to the showroom already armed with a finance offer from, for example, Tesco or a high street lender,” said Mr Iversen.

“Dealers are missing out on the sale because they are not prepared to try to convert the customer to the in-house finance package, despite the fact that it often offers a better rate.”

Consumers are a captive audience when they visit the showroom, which dealers should exploit by promoting the benefits of bundling services like finance and warranty under one attractive price.

“Every used car sale is unique because it usually involves a part-exchange - banks can't quote for a customer's existing car,” said Mr Iversen. “The salesperson has plenty of opportunities to get the customer excited about bundling the facilities together as one package.

“They have to ask the questions and put together a realistic deal - if they don't, they are not doing a very good job.”

Dealer confidence in the used car sector has risen in recent months as the market picks up. Experts are predicting a 400,000-plus new car market in September on the back of the new registration system.

Mr Iversen said: “September will pull in a lot of part-exchange models.

“Dealers will want to sell these before winter so I expect a buoyant three months from mid September to mid December. Hopefully this momentum can be carried forward into 2002.” Online Finance intends to make inroads into the £15bn finance market by targeting dealer and large superstore business through its seven-day 'rapid response' service and 'price for risk' product.

“Rapid response allows customers to drive away cars the same day - even over the weekend,” said Mr Iversen. “Price for risk helps dealers to sell more cars because it covers all of their potential business, from top-end finance to sub-prime. Many companies specialise in one area, but we can compete across the range.”