By Richard Robinson, COO REALtime Communications
• News that over half of PCP customers are expected to refinance their GFV is a reason for action in retailers now
Over 90 per cent of people buying a new car in the UK use dealer finance, and that finance is dominated by Personal Contract Purchase (PCP) activity.
PCPs have proved to be a great retention tool and good for aftersales simultaneously. The typical three-year cycle has encouraged buyers to change their cars regularly, and vehicles ‘in warranty’, such as those under three years old, are typically serviced in a franchised environment.
For sales, aftersales and retention, research by NTT Data UK&I shows that 52 per cent of consumers who bought their car using PCP are now expected to refinance them rather than trade them in for a new vehicle at the primary hiring period when the Guaranteed Future Value (GFV) option fall due.
The rationale for this change in consumer behaviour can be attributed to a combination of new car shortages, the cost of living crisis and – arguably – uncertainty in switching to an EV right now. Whatever the reason, retailers must seek to recognise the challenge and work to ensure they engage with customers well ahead of their end of contract.
Opportunities exist to arrange refinancing and, notably, set up extended warranties, service plans and other added value products, such as paint protection and undertake a vehicle health check (eVHC) to help each customer to retain the reliability and safety that for many are an inherent part of their decision to choose a new car.
The proposition is clear: ‘You may not want to buy a new car right now, but we can help you to keep the car you bought new in a great condition through our dedicated team of brand experts. And when the time is right, we will be ready with your new car.’
Collaboration between aftersales, sales and marketing is needed to tailor bespoke offers to customers at an individual level and to ensure one-to-one contact, notably at the service desk, is ‘on message’. Not acting may risk losing a customer. Reaching out to help them can be a ‘delighter’ and help to retain their loyalty for years to come.