‘0% finance deals will not be enough to sell cars’
With car showrooms reopening, Mike Rutherford thinks dealers now have to be more ambitions and creative to move metal
Business as usual? Hardly. But at least regular car showrooms were given permission by the UK Government to reopen from 1 June. Now all the dealers have to do is become more ambitious and creative as they fight like never before to move metal.
The usual discounts and low or zero per cent finance deals will not, on their own, be enough. Franchised, non-franchised and online retailers need additional support from manufacturers. Peugeot has, in recent years, done a fine job in offering city cars with free insurance. Some rivals like the idea, but might not want to seem to be copying the French giant. So do the same but different, I say. For example, offer free insurance as an incentive for motorists looking to buy a city or family car – but only if they can prove they have already earned a maximum no claims discount after several years of claim-free car use.
On a similar theme, at least one maker has assured me that for buyers choosing its most efficient diesel models it would like to (with mileage restrictions) pay for the fuel used in the first year of ownership. Trouble is, trials proved it was an administrative nightmare. My solution? Hand the buyer a pre-paid fuel card to the value of, say, £2,400 when he or she gets the keys to the new motor. All additional fuel costs at his or her expense, of course. Job done.
Another scheme worth considering is more serious. You Work, You Drive, I call it. Meaning? If someone’s got a job, they can (not must) get a car. At least they can if they’ve got a reasonable (not perfect) credit history. Manufacturers, retailers, employers, and the finance industry would have to join forces in such a scheme, while the usual watchdogs could police it.
Sure, low or lower-paid workers wishing to lease cars – new or used – may need to keep them longer than normal to enjoy the affordable low-interest rate payments that could be deducted from monthly salaries. Conveniently, the potential introduction of a new scrappage-type programme that’ll incentivise wealthier folk to get rid of their existing, often perfectly adequate, cars in favour of brand-new state-of-the-art models could create a timely supply chain for less-well-off folk in work, but not earning much.
To those who say scrappage means scrappage, I say this: if a car is so old, knackered and polluting, yes, scrap it. Or better still, dismantle it and salvage most of the parts. But if it’s still got life in it, and is safe and fuel-efficient, it might be a great fit for a low-wage worker understandably keen to avoid crowded buses and trains in these COVID times.
On a less serious note, the most cost-effective campaign I ever saw was in the USA, where I lived for a few months. A dealer offered free coffee to commuters – on condition they had it in the showroom. Joe, my neighbour, thought he was putting one over on the dealer by grabbing and downing his freebie five days in a row. But by the end of the week, the salesman who poured him his coffee had sold him a $50,000 car. Joe was so impressed with his experience that he bought his wife a new motor from the same place. True story. And one that hard-pressed UK dealers could, and should, learn from.
Do you agree with Mike? Let us know your thoughts in the comments section...