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Dealers turn to up-sells as used margins squeezed

Dealers are aiming to sell more warranties, service plans and GAP insurance to make up the shortfall of reduced used car margins.

According to Damian Tyler, head of business development at The Warranty Group, dealers are looking at increasing their up-sell items as acquiring used becomes more expensive through greater competition for stock.

“Pretty much across the board, increased price competition and higher costs of acquiring stock mean that the margins on used cars continue to be under pressure,” he said.

“Smart dealers are therefore looking to make more out of the total sale and one way to do this is to ensure that their added value product portfolio is appealing to used car buyers and being promoted effectively.”

Tyler said dealers were taking a fresh look at their added value products and how they were sold.

“Much of the thinking from dealers is linked to the expectation of a continuing economic slowdown. They know that at times such as this, motorists will tend to look to products that provide a safety net against unexpected costs and many added value products do this.

“It is about ensuring that you are able to offer extended warranties that provide good coverage and value, service plans that spread costs effectively and GAP insurance that delivers easy and effective protection.

“Anyone who has worked in a dealership through points in time when used car buyers are concerned about the economy knows that the appeal of these kinds of products naturally increases. It is about not just increasing profitability but ensuring that you are meeting the needs of customers.”

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