>Why changing consumer spending habits are threatening aftersales revenue
Why changing consumer spending habits are threatening aftersales revenue
As consumer trends continue to diversify and evolve, it is imperative that dealerships remain competitive, relevant and attractive.
The volatility of the UK economy and the increase in inflation to 2.3 per cent in March is adding fuel to the fire as it starts to have an impact on spending priorities due to rises in living expenses.
A report by global accountancy firm EY found UK spending is expected to fall to its lowest growth in four years, rising by a mere 1.7 per cent, with next year falling even further to just one per cent.
Unfortunately, the inevitable knock-on effect of this means dealers lose out more than most as vehicles, repairs and servicing get pushed further down the pecking order in favour of essential goods and expenditure such as mortgages and household bills.
As a result, consumers increasingly expect to be offered affordable finance options, where the cost of purchases is typically spread over several months or even years.
Retailers, for example, have become adept at enticing customers with a range of competitive monthly instalment plans, often offering interest-free deals to secure a sale, while mobile phone and car insurance contracts have also contributed to the growing demand for finance options.
Even online retail giant Amazon has recognised the benefits of finance deals by offering consumers interest-free plans for its Kindle, Echo and Fire TV devices.
In light of the availability of finance alternatives, a move away from credit cards is also on the increase. According to figures released by Visa in February, credit card spending growth in the UK dropped to a five-month low of just 0.4 per cent in January, one of the slowest annual rate rises of the past three years. Surprisingly, while most dealerships have embraced the finance revolution by offering repayment plans through their sales divisions, aftersales often gets overlooked, meaning thousands of motorists are reluctant to spend on maintenance.
Indeed, a study by price comparison website Confused.com found a staggering 10,766 UK motorists were fined for driving vehicles with defective tyres last year, while the same issue meant 2.5 million vehicles failed an MOT test in 2016.
Aside from the obvious safety issues related to driving unsafe vehicles, the figures mean dealers who refuse to offer flexible payment plans are losing out on significant revenue streams. By keeping up with changing customer finance expectations, however, dealerships can encourage motorists to tackle repairs and maintenance, and help to make our roads safer.
The popularity of Bumper’s solution has led to it being rolled out across franchised dealerships belonging to some of the world’s biggest vehicle brands such as Jaguar Land Rover, Peugeot Citroën, Ford and Vauxhall. Dealerships have found their customers have been able to go ahead with work using Bumper that they otherwise couldn’t have afforded, allowing them to ensure their vehicles are safe and operational, while managing the cost.
The payment method is funded exclusively by dealers, who pay a small transaction fee on any sales made through Bumper, meaning the customer gets flexibility with no extra or hidden costs. It is the only funding solution available that focuses solely on the repairs and service market.
James Jackson, founder and co-CEO of Bumper, said: “It is clear there is great demand for more options when it comes to covering the cost of maintaining our vehicles, which is all too often an expensive and stressful experience. Bumper provides greater flexibility and transparency to enable motorists to stay on the road without the hassle of high, and often unplanned for, one-off bills.
“Dealerships have been offering finance packages on vehicle sales for many years, and they are beginning to recognise the importance of adopting interest-free payment methods within their service divisions.
“This investment will enable us to continue our rapid growth by growing our technology team to enable us to further improve the customer experience, adding more features and even greater flexibility.