The forecast for used car sales is fantastic – with the numbers continuing to grow. One reason for this is that millennial consumers prefer second-hand vehicles because they are less costly. By 2027, the global market for used cars will reach $1.53 trillion, which means demands will continue to rise However, it may be harder to sell an auto service contract for a used car to the cost-conscious generation without using the right approach. It’s one of the primary reasons most used car dealers avoid offering this policy to their customers. Some even choose not to add this option because they don’t see how their business will benefit.
Pointing out the logical reasons for purchasing a service contract can soften up even the most hardened buyers. By selling them the benefits of having a service agreement, you’re more likely to close a sale.
Are you still on the fence about including an auto service contract in your sales strategy? Read on and the specific benefits your business will receive.
Benefits of Buying an Auto Service Contract for a Used Car
Your Finance and Insurance (F&I) department will undoubtedly generate higher profit through selling vehicle service plans. However, the benefits can go far beyond the added revenue. Here’s a deeper look at the advantages of offering aftermarket service contracts to your customers:
Opens Another Source of Revenue
Enticing your customers with service contracts for their used cars can generate more revenue for your dealership. Think of how much extra money you can make even if just a tiny percentage of your customers buy them. Plus, you don’t even need to put in a large investment to do so.
Remember that customers already in the buying mode are easy to convince into getting add-ons. Your dealership will not lose anything if you entice buyers to purchase a service contract along with their newly-purchased used car.
With third-party companies providing most of these service contracts, you won’t even need to go above and beyond to sell them to your customers. Most service contract providers handle the paperwork themselves. They also take care of matters involved in coverage assessments and claims. With this in mind, all you have to do is train your sales team to market the plan without scaring buyers off.
Boosts Your Dealership’s Brand Authority
One way of enticing your customers to return every few months to your showroom is through extended auto service contracts. Since these plans include scheduled maintenance like tune-ups and oil change, customers will regularly come back to your dealership – benefiting you in various ways.
As customers keep coming back to your dealership for their scheduled maintenance, it will help reinforce your brand’s authority in their minds. You can also enhance your image by providing high-quality services to your customers. Then, every time they want to buy a car or need auto repair, they will think of your company first.
Apart from this, they can also help spread the word about how great and trustworthy your dealership is.
Allows You to Generate More Profit Per Used Car Sale
Cars depreciate over time, and for used vehicles, it can happen even faster. With new models introduced every year, a year-old car – even with good mileage – may look outdated to some buyers. Furthermore, parts are no longer brand new, so they can easily get worn out. These reasons alone can make selling used cars harder. However, the challenge opens up an opportunity to earn more with service contracts.
Offering protection for your used vehicles through service contracts can help increase the likelihood of closing a deal. Customers wouldn’t have to worry about problems with the car. Adding an excellent service contract will help you reassure customers that their purchase is worth every penny. As a result, you can earn more from selling both the car and the policy together.
Used vehicles with this type of protection plan typically sell a few hundred more.
Improves the Likelihood of Repeat Customers
Customer satisfaction should always be your priority. It always feels good to see how satisfied the people are every time they leave your dealership. And by offering them a service contract for their used car, you give them a chance to eliminate the worries that come with car maintenance.
Additionally, when customers go in for their car’s oil change or tune-up schedule, it gives you an excuse to get to know them better. If you take the time to do this, you’ll be able to recommend other cars or auto services offered by your dealership. This way, they will continue coming back even after their original auto service contract is over.
Selling Tips for Your Customers
Used car buyers already know its disadvantages compared to a brand new vehicle. Therefore, offering a vehicle service contract to them may seem an easy task. But because most buyers are wary of the additional cost, you need to present the benefits upfront for better chances of securing a sale. Here are some pros you can highlight to your buyers:
- Increases their car’s resale value: Customers who are not planning to keep the car for a lifetime will find the boost in resale value very beneficial. The contract will help them keep the vehicle’s parts in good condition – enabling them to get a reasonable price when they trade it in later.
- Offers peace of mind: All car parts wear down over time. With an auto service contract, customers won’t have to worry about out-of-the-blue expenses. It helps them eliminate any sudden financial burden due to repairs.
- Freedom to customize the policy: Your buyers can fully customize their auto service contracts to match the protection they need with their budget. They can even bundle their contract with roadside assistance for even more convenience.
Include Auto Service Contract in Your Used Car Sales Strategy
With most used cars already past their manufacturer’s warranty period, it’s always an excellent move to provide your customers with an auto service contract. Offering a protection plan with each used car shows customers your dealership’s sincerity in your sales and services.
Do you want more assistance in improving your dealership’s performance? Contact us, and we’ll help you take your business to the next level.