Older Car Trends

Browsers versus Buyers

Start Date: 1/7/2008

The success of traditional advertising media, such as local papers and classified magazines, relies on readers making a conscious commitment to investing time into getting out and looking at cars. This conscious commitment is what is missing from the current marketplace. With fewer active buyers responding to ads placed in traditional car buying publications, some traders have been hunting out the elusive car buyer by marketing in slightly different areas.

One obvious place to look for new business is in the sales ledger. Proactive marketing to existing customers – find us a buyer amongst your family and friends and earn £50 in Marks and Spencer vouchers – is one way of tapping into a seam of new customers. Another is to reach out for a different sort of buyer, one that takes a little more effort to sell to: the browser.

Perceived showroom wisdom has long had it that browsers are high maintenance, so dealerships have always steered sales staff towards qualified buyers, getting them into a test drive as soon as is humanly possible. High pressure sales tactics make little business sense however, and this is especially true when the financial going gets tough. One consolation for car dealers when the forecourt is quiet is that they have more time to spend on communicating with browsers, be they physical or virtual.

These days, browsing legwork is more likely to involve the Internet rather than shoe leather, and eBay is as good a place as any to catch browsers, as it has the distinct advantage of an almost endless supply of varied content. The vast array of products on offer allows browsers to wander through to the ‘Motors’ section from other parts of the site. This is a much softer sell, which many customers react to very positively.

eBay’s core sales mechanism has traditionally been the Internet auction. However, thanks to recent alterations to the eBay search engine, eBay Classifieds are now featuring far more effectively in searches using default site settings. Whereas Classifieds would previously have been shown as the final listings in search results, they are now appearing much higher up the rankings. Traders report this as a definite boost to their eBay marketing programmes. Another big advantage of using Classifieds, rather than the “Buy It Now” option on auction sales, is that eBay Classifieds are not subject to the distance selling regulations that apply to a “Buy It Now” transaction.

Other eBay changes have also added to buyer confidence. Sellers can now leave only positive feedback for buyers, a tweak that is bound to convert more browsers into buyers. Though eBay’s in-house Paypal payment system is now compulsory in many sales categories, upcoming changes to the Paypal system from July 9th mean that sellers will no longer be forced to pay up to 3.4% uncapped commission on payments made from buyers’ bank accounts or Paypal balances. This change is long overdue, and will certainly be welcomed by many trade sellers, whose biggest complaint about the eBay machine to date has been the fees.

What remains to be seen, however, is whether eBay will now face a barrage of bank charge-refund claims along the same lines as the high street banks, who have so far had to deal with over 750,000 letters of complaint from customers aggrieved by disproportionate fees for personal banking misdemeanours. Though eBay Europe now operates out of Luxembourg, this hasn’t always been the case, and the law allows for claims in England going back up to 6 years. eBay have been charging sellers credit card-sized levies on payments made from buyers’ cash reserves for years, so perhaps the Internet colossus should be bracing itself for a tidal wave of pent-up seller resentment. It’s anyone’s guess how bad a taste that would leave on eBay’s salad days.

Market Trend

At the bargain basement older end of the market, the current sales slow down has more to do with a lack of consumer confidence and sentiment rather than price. Despite an overall downturn in the level of business, traders who have managed to keep selling report retail prices as reasonably steady and in line with their expectations.

Small cars remain prized for the obvious reasons of economy and cheaper road fund licences. Downsizing is prevalent among buyers, with many happy to take a bit of financial pain to be in something that will cost less to run in the medium term. The advantage for the trader here is high scrap values adding value to deals involving part exchanges, even when no MOT is present – more of that later.

Medium and upper medium sectors are quite a bit slower than the small cars and this is no great surprise. The summer is never a great time to be selling bread and butter cars, and interest traditionally wanes around this point every year. If there was good news we would report it, but apart from the odd exception, things are patchy at best.

Large cars and compact executives are also off the boil, though the higher mileage diesels are finding homes, again for reasons of perceived fuel economy. Audi A4 TDis, in particular, retain a certain air of saleability, even with 175K miles on the clock, and should not be discounted as a sales proposition, perhaps as a disposal sale on eBay.

MPVs and 4x4s in the Guide had begun to look like good value for money, but there are precious few customers out there for petrol automatics in these body styles now. How hard values will fall this year is anyone’s guess, but it is certainly not going to be pretty. Prices are teetering at the time of gong to press, but the tanker drivers’ strike will undoubtedly keep fuel consumption at the forefront of consumer consciousness. This is not good news for large automatic cars.

At time of going to press, Cabriolets had seen no seasonal lift in fortunes at this end of the market, and trade prices were below expectations, particularly for roadsters such as the Mazda MX5 and Rover MGF. Quality four-seaters, such as the Golf Cabriolet, have fared a little better, but are still behind where one might expect for the time of year.

Hot hatch and coupe prices are also failing to keep up, unless the car in question is in spotless original condition. Where condition is impeccable, there is still a stream of buyers waiting in the wings, provided what is being offered has some degree of practicality. The Golf GTi, particularly the late Mark 2 5-door, is a good example as it has that classic shape, and also benefits from 40-plus mpg, and three point seat belts in the back for the kids.

Behind the headlines of celebrities paying record Ferrari prices, the classic car market has been quiet so far this year, the buzz of 2007 now a distant memory. Tax exemption is still an attraction for some buyers, but the reality is that there are few pre-1973 cars suitable for use as daily transport. Most are not considered to be practical enough these days, and are regarded as toys. General prudence with money this year means that the lack of a practical point to the purchase has been a further handicap, and overrides any consideration for free road tax covering the few months of the year that the car will be in use.

The fuss over road fund licence has not had much effect on owners at this end of the market, with most older car drivers just continuing to pay their £99 every six months. Car owners should not forget that their tax disc remains currency until it has entered its final 30 days, and discs can be redeemed at any time when a vehicle is not in use.

The price of scrap metal has soared in recent weeks and shows no sign of falling back any time soon. The next edition of the Guide will feature alterations to some currently understated disposal values, to account for the rise in scrap metal prices. Dealers report that most cars will fetch a basic minimum of £50 when weighed-in in “contaminated condition”, that is with all fluids still in place. We are also told that alloy wheels can add up to £10 each and catalysts another £40 each in places. This is putting useful profit back into many older part exchanges.

Prospects for the months ahead are not outstanding, but neither are they non-existent. Those dealers keen to stay in the game should remain positive, as cars are definitely changing hands, albeit not in big volume at the minute. A focus on maximising Internet presence in a cost effective manner, and improving natural search returns through search engine optimisation should result in useful new business at the competition’s expense, but at no additional cost to traders. We will cover some of the basic tricks of search engine optimisation in our next edition.

John Glynn
Car Editor
July 2008