According to S&P Global Mobility, the average age of vehicles on the road in the U.S. rose to a record 12.2 years in 2022, representing a two percent increase from 2021. Twenty years ago, a car might have changed hands once or twice and lasted 100,000 miles, Today, it is more common for a car to have multiple owners and last for 200,000 miles or more. This extended life cycle of today’s cars creates more value for both owners and dealers – but with one caveat. These high mileage vehicles need high mileage protection to keep the car and its value in tiptop shape.
There are a couple of other issues at play, prompting consumers to keep a vehicle past its ‘prime.’ Thanks to rising new vehicle prices, many consumers are financing their vehicles for upwards of eight years in order to keep the monthly payment in an affordable range. Consumers also factor in long-term reliability when choosing a vehicle, a key criteria in OEM marketing and brand preference.
Today’s older cars also retain their drivability and are in better shape than the days of a heavy metal chassis. Vehicle manufacturers are building cars with a longer lifespan, leveraging improved assembly processes, better materials, and placing an emphasis on vehicle safety guidance from the National Highway Traffic Safety Administration and the Federal Motor Vehicle Safety Standards and Regulations. As a result, many of the top 15 longest-lasting cars are likely to reach 200,000 miles or more and also are ranked as the best-selling vehicles, based on automotive research firm iSeeCars.com.
These high mileage vehicles present several opportunities for dealers to generate additional revenue during their longer lifespan. Let’s look and see how offering strategic solutions can keep cars on the road, customers coming back and dollars in the till.
Don’t just repair – upgrade the customer service experience
Most customers don’t think about servicing their new vehicle at the time of purchase. But this is the perfect time to introduce the customer to their service advisor – and set up their first maintenance appointment. Many manufacturers require specific check-ups that not only keep the vehicle operating at peak performance but also enable parts and software updates.
Connecting the customer to their service advisor at the time of sale reflects a high level of customer engagement, strengthens the relationship with the dealer and increases the likelihood they will return for their valuable service needs.
Continue this high-touch customer service throughout the relationship by leveraging customer relationship management (CRM) digital tools that keep the customer connected to their sales and service team. Ask the customer to opt-in via text or email to receive updates about their vehicle, then send them timely, relevant information about needed service appointments, manufacturer updates and money-saving promotions. Make sure the CRM platform offers one-click links and responses, but also tracks customer response.
While CRM platforms keep your team digitally connected to the customer, ensure your service advisors are connecting to the customer in person. Managing the customer interaction at every point of the service appointment is critical to maintaining the customer relationship. Is the adviser focused on getting the vehicle in and out of the shop? Or are they focused on meeting the needs of the customer? Offer customer reviews through the CRM platform and monitor performance in the service office. This is a perfect opportunity to offer regular training on exceeding the dealership’s expected customer service model. And while you’re training, include a module on selling “credit-card” sized F&I products, such as a tire and wheel policy or broader maintenance products.
Protection products save money
Clearly, a high mileage vehicle will require more than wear-and-tear maintenance. But those repairs are much more costly and often take the vehicle off the road for several days. Parts supply chain issues, labor shortages and rising prices are currently impacting vehicle maintenance.
F&I protection products such as EFG’s Drive Forever® Limited Lifetime Powertrain Protection product and additional Lifetime Wrap can give the consumer added confidence that they will be protected during the car’s extended lifetime. When offered as complimentary, this protection product helps remove a barrier to the sale. For example, one dealership experienced a 20 percent increase in used car sales when utilizing Drive Forever. Lastly, this complimentary offering sets the stage for F&I managers to better position the benefits of a vehicle service contract and other protection products to drive greater product penetration. On average, dealerships that utilized Drive Forever saw a 15 percent higher VSC penetration and a 38 percent higher average gross profit per vehicle!
Sell the high mileage ‘auto-biography’
Even though used vehicle inventory remains tight, the Manheim Used Vehicle Value Index reflected that wholesale used vehicle prices ticked down in April for the third month in a row. Retail pricing also declined 13 percent from March to April. Savvy dealers can boost their used car inventory by proactively reaching out to previous customers or offering a ‘bundle’ on a used car/new car deal. As interest rates tick up, buyers will appreciate the opportunity to lower the cost of their new vehicle by selling their used one to the dealer.
As these vehicles enter your dealership, take steps to attach a certified pre-owned (CPO) package. EFG offers Verified Ride®Certified for franchise dealers and Second 2 None® Certified Pre-Owned for independent dealers. Both programs are designed to boost customer confidence in the value of the vehicle while boosting revenue per sale.
A CPO adds instant value to a used vehicle with a detailed inspection of more than 100 maintenance points and roadside assistance in the event of a breakdown. This expert evaluation and protection not only safeguards the vehicle, it instills confidence in the customer that the vehicle is reliable. CPOs also deliver value to your dealership. Vehicles with a CPO attached command a higher front end gross profit and provide excellent steppingstones to a VSC. Lastly, with CPO programs like Verified Ride and Second 2 None, dealers can certify all vehicles on the lot, not just the manufacturer CPO programs.
As your strategic business partner, and F&I leader, EFG has the tools and resources to protect those high mileage vehicles and your bottom line. We bring a wealth of industry expertise, business acumen, and tools to drive value for our dealer clients. We’re not just your F&I provider – we are your business partner. Contact us today to learn more about our profitable solutions that can drive success for your business in 2022. #DealerRevenue #CustomerService #ValueSelling