In the latest installment of the annual Power 300 issue of Auto Remarketing, we go behind the scenes with some of the leading companies in the used-car space and their top executives with a few Q&A features.
First up in this series is Jimmy Atkinson, chief operating officer at AUL Corp.
Jimmy Atkinson: We see steady appetite and even some growth. Dealership penetrations have risen and now stand at around 42 percent, up a couple of points from 2010-2011. People see value in protecting themselves from costly repairs, especially as our vehicles become more complicated and expensive to repair. Also, consumers know that if they have a breakdown and somehow have to repair the vehicle while making all of their other budgeted payments, it’s tough so they are open to protection from that.
AR: What are some of the latest trends in car-buying that impact your space the most?
JA: In the used-vehicle space, the strength of CPO programs is certainly attracting consumers. There is a distinct separation in the customer’s mind where the vehicle is certified and they see a safer, higher value purchase. We welcome that because it is a natural introduction to the vehicle service contract. Also, online retailing is a major factor in today’s market and dealers are much more sophisticated on how they exploit it and maximize their efforts, not only with their websites and social media but also through third party sites like Autotrader, eBay and so forth.
AR: How has the extended warranty/service contract space changed with online retailing gaining traction?
JA: Well, most of the transactions still end up at a dealership, so to some degree, it hasn’t changed a lot. I think you are seeing, and will continue to see, a push to make F&I products part of the vehicle offering online in a transparent way. The more a customer feels he or she is prepared prior to arriving at the dealership, the better the experience will be. And F&I is the final frontier for that.
AR: What are some best practices you recommend for dealers selling the extended contract/service contract to consumers?
JA: First and foremost, present every customer with the service contract and the benefits they will receive from it. We train that they should include it in every menu presentation and that they should tailor the coverage and terms to the customer’s needs. Also, the F&I manager must be a professional who studies and knows their products and is fully disclosing everything they are selling.
Finally, they should understand that people like to buy more than they like being sold. Just present the value a vehicle service contract provides, ask questions about why they may object and offer reasons they should reconsider.
Jimmy Atkinson, AUL Corp.