Why Your Dealership Should Be Offering High Mileage VSC Now…
There was a day not so long ago that the average used car shopper would never have imagined having to consider choosing between two cars that each have over 150k miles on them…but now many do. And truth be told, most dealerships would likely never have had such high mileage cars on their lots to begin with unless it was a small BHPH.
Now there is almost little to no limit to how old or how many miles are on a car before it’s reconditioned and put out on the front line.
With this increase in older cars being sold at both independent and franchise lots, it throws a spotlight on the need for a robust VSC offering that can help your shoppers get more protection now that their exposure to repairs is greater.
If you’re not offering a high mileage VSC, you need to.
Here are some reasons why offering a high mileage VSC could be one of the easiest menu items to present to your customers and why the market has made this shift…
When Regular ‘Supply & Demand’ Becomes NO Supply and ALL Demand.
With the chip shortage that was uncovered in early 2021, it forced dealers to look at ALL used cars differently. No longer was a trade-in with 125k miles banished to the wholesale lots around back and doomed to be auctioned off to a small BHPH lot somewhere on the other side of the state.
Older, high mileage cars are now reconditioned and aggressively marketed to every car shopper as now no dealer can afford to assume that there is no local buyer for that 10 year old SUV with 150k miles. Someone will buy it. Why? Because there simply isn’t much to choose from.
Cox Automotive’s recent studies show that what they call ‘super high miles’ car sales were up 7% from March to December of 2021 (though there has been a slight dip YTD through March 2022). The average used car on the road is 12.1 years old.
Pricing for New Cars Pushes Pricing for Used
Rising new car prices have helped push used car prices to historic levels, as much as 40% higher YOY since the start of the chip shortage. This hurts buyers who are looking for something affordable with low miles that they can get years of driving out of. Now it’s buy old, buy high, and take your chances.
Many buyers are being locked out of 2-3 year old lease turn-ins and CPO vehicles as they have all skyrocketed in price. So if you can’t buy the more desirable cars, that leaves you considering older cars with more miles.
Change is in the Air
It’s safe to say that now 200k miles is the new 100k. What was once a car past its prime that no one would consider, consumers are willing to give them a fresh look. Attitudes are shifting across vehicle types and manufacturers. Franchise stores have embraced this trend by investing time in deeper mechanical inspections and fixing everything immediately to get the cars on the lot that have the best chance of being sold. Vehicle history reports and more photos, etc are helping more of these units sell faster online, helping to prove good condition.
Independent dealers are now having to compete with franchise stores for these potential sweet deals for car shoppers and it’s helping them up their game from a marketing perspective. Every dealer, new and used, has to throw out the old playbook and meet today’s stressed car shopper where they are and with the vehicle they need now, even if it’s been on the road for a while.
High Mileage VSC is a Necessity
Consumers who are looking to buy the 10 year old SUV with 165K on the odometer need a higher level of protection and a High Mileage VSC can be the perfect add-on. When looking at adding a plan like this, look for these benefits:
- White Label/Private Branding capability - It’s important to work with an administrator that can help you roll out the High Mileage VSC under your dealership brand. Increasing the ‘why buy here’ value proposition is critical in making sure your local buying knows that the older cars on the lot can be protected for years to come.
- Offers Full Stack Claims Benefits - Coverages that go out to 200k, 24/7 roadside with rental reimbursement, and A-rated claims adjudication ensures fewer chargebacks and CSI hassles in the years to come
- Plan/Component Flexibility - Make sure your provider has plans that are flexible on term and coverages, with a competitive cost that allows maximum margin for F&I while still offering your customer a plan that fits their budget.
Wait! We Know Just the Plan…
If your current F&I provider doesn’t offer a High Mileage VSC to help your customers who are looking at older vehicles, it’s time to consider a switch. TruMax, powered by TruWarranty, can offer all of the benefits shown above with a plan built with dealers in mind.
Give us a call today to see how easy it is to give your high mileage customers the peace of mind they need to make them buy these vehicles faster and feel better about buying it from you.
a new and growing set of players in the VSC space are multiplying like rabbits in the industry. More and more are getting their VC infusion and creating their slick websites to compete with dealerships who sell VSC’s.
Credit union buyers are not a lost cause for the two most popular F&I products you sell. You may have to sell it for less but it can still be a win for your team. You know you are losing on the finance gross but selling a handful of plans will help the bottom line.