May 22, 2017

Risk-free automotive promotions that guarantee to raise the roof

2017 could well be the biggest year for car manufacturers since 2005, according to figures from the Society of Motor Manufacturers and Traders (SMMT), with the number of auto registrations achieving a 12-year high in January, rising to a 2.9% year-on-year uplift.

While this may seem optimistic in the wake of the economic uncertainty as details of the government’s Brexit deal remain to be made clear, nearly half of SMMT members expect the industry to be completely unaffected by the UK’s withdrawal from the EU. If not convinced, it is probably the most opportune moment for manufacturers to consider looking for new promotions that will bring car buyers into dealers’ showrooms without having to risk slashing prices.

The risk-free solution

The conventional solution would be for manufacturers to simply increase the trade-in price for vehicles. This tactic, however, carries a substantial amount of risk, tacking on another expense to crowded budgets that already include the cost of storage, sales, repairs and valeting. For most manufacturers, this simply isn’t viable.

In order to offer the same level of incentive as their competitors, while avoiding the risk of raising trade-in prices, vehicle manufacturers can instead opt for creative new promotions. Implemented by an established risk-managed sales promoter and backed up by data analysis, these promotional tools provide extra value to customers while also protecting manufacturers from any potential risks. They open new roads to dealers seeking to make compelling offers that were previously considered unaffordable.
These promotions not only allow manufacturers to make themselves more attractive to buyers, they can also keep the customer coming back to upgrade, reducing the length of the refresh cycle in the process. A risk-managed sales promotion company can guarantee these deals run smoothly, taking the burden of risk away from the manufacturer and allowing them more room to manoeuvre.

Easy upgrade

‘Easy upgrade’ promotions provide more value to car buyers than established guaranteed future value (GFV) deals, making it simpler for them to switch to another model and get out of an existing contract much earlier than was previously possible. This factor is also beneficial for manufacturers, as it can have a major impact on the length of the refresh cycle.

Buy and try

‘Buy and try’ promotions give buyers more confidence in making an impulse decision when browsing for a potential new vehicle by providing them with the option to return any qualifying model back to the dealership for a full refund within the first 90 days of ownership if they are dissatisfied with their purchase.

Free Insurance

When broken down into monthly instalments, the annual cost of car insurance appears more financially viable compared to when the cost is presented as a lump sum. Offering to cover up to the UK average on the buyer’s first year of car insurance adds value for the buyer, especially when refunded to the buyer in one lump sum once proof of the car purchase and insurance cover are submitted to the manufacturer.

Free Fuel

Gifting buyers with free fuel for one whole year, with the total fuel expenditure based on the average annual mileage and the MPG of the model featured in the promotions, customers will again be attracted by the total annual saving presented as one lump sum, while the manufacturer can control this expenditure by splitting this figure to determine a monthly spending limit on a branded fuel card that can be used at any UK petrol station.

Building loyalty

The potential for boosting customer retention is huge, as each customer now has an added incentive to return to the same manufacturer following each deal. If this process is repeated for each upgrade over the customer’s life, the cost of hiring a sales promotion company would be covered several times over.
The risk for implementing these promotions is made minimal, thanks to informative data-based analysis, and is carried by the sales promotion company rather than by the manufacturer. These offers also provide manufacturers with a high level of flexibility, allowing them to adjust the value of these deals based on the needs of their individual customers.

Turbo-charged promotions

With approximately 75 per cent of all privately purchased vehicles in the UK being bought through finance deals, these promotions provide manufacturers with an enormous amount of potential for enhancing customer loyalty. Other well-established promotions, such as guaranteed future trade-in values, continue to fall short of this goal, as many customers are being left unsatisfied with the trade-in values being offered to them.

Promotional schemes such as these can provide vehicle manufacturers with loyal, life-long customers at a rate not previously possible. With the automotive sector becoming increasingly profitable once again, there is plenty to gain and little to lose by implementing these powerful and attractive promotions.

By Matthew Wallis, Sales Director, Northern Europe, Opia.