Right now, not many Dealers are looking for a new way to make a profit in the car business. Since Covid arrived, business has been pretty darn good. Sure, there is some uneasiness about inventory or lack thereof, about pricing, buried customers and the like, but overall things are going pretty good in the automobile business. However, anyone who has been in this business any length of time knows that changes are coming. For example, what will we do when customers want to trade in a vehicle they purchased at an inflated price in 2021? How will electric cars impact our service department? Where will the next opportunity in sales, service or F&I come from? And the elephant in the room, what new Covid news will be coming at us?
That said, there is a dynamic new product that has just appeared on the market that will solve some of these problems. Carfax, which was founded in 1984, has been around long enough that it is recognizable and expected by most customers on any vehicle they are considering. Two cars sitting together, same year, same model, same miles, but one with thousands of dollars’ worth of accident damage and one without will have very different values upon trade-in. This is commonly called diminished value due to an accident/repair. This vehicle report card makes it very easy for the next buyer to know before making a buying decision whether the vehicle has been in an accident. This can make it difficult to find a buyer for that vehicle. It’s a big problem that affects millions of people upon trade evaluation.
Most of the major insurance companies have already addressed this problem and are advertising an accident forgiveness feature for their customers. This is not the answer to diminished value protection but it’s a start in the right direction.
Diminished value protection can save the customer thousand of dollars when they trade in their vehicle. It works very similar to Gap, and it is a product that can be combined with Gap sales to add extra value and protection for the customer. Unlike Gap however, where only 7% of your customers will use it, 95% of your customers will be in some sort of accident that will affect their vehicles trade-in value and are perfect candidates for Diminished Value Protection.
We all know that accidents happen. Once damaged, even a properly repaired vehicle can lose up to 30% of its value. Diminished value occurs even if the accident is not your fault. Most customers don’t realize that the insurance company will pay to repair your vehicle but will not protect the trade-in value.
When you offer Diminished Value protection, it improves the opportunity of selling the customer another vehicle. It eliminates negative equity that results from an accident and will drive previous customers back to the selling dealership.
The beauty of offering this product is that it can be sold in any department. It can be sold on new cars, leased cars, and used cars. You can sell it in Finance or Service. There is even a video that makes it easy to sell online out of your BDC department.
This is a great product addition to any dealership. It can help the customer in so many ways. You will be offering total peace of mind and a proactive approach to the diminished value problem that affects many of your customers. It is the perfect compliment to Gap and provides a convenient and hassle-free way to trade a previously damaged vehicle.
Because it is new, only a few dealers are currently offering this protection to their customers. If you have an interest in offering a diminished value protection program for your customers and added profitability to your store, contact Dealership for Life and we will show you how it works and design a program just for you.
Latest posts by Jack Garrity (see all)
- Shifting Priorities in a Changing Market - August 3, 2022
- Outstanding Innovative New Finance Product - December 6, 2021
- A Viewpoint on Loyalty - March 1, 2021