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Franchised dealers urged to rethink part-ex strategy, or lose more business to car buying websites

Author: Neil Addley, JudgeService managing director

When it comes to trading-in time, most owners say they will use the franchised dealer they plan to buy their next car from to get a part-exchange valuation but in practice many end up selling to specialist buying platforms if they find a better price online. 

Research for JudgeService’s forthcoming annual State of the Nation survey polled the views of 6,524 car buyers to identify consumer trends impacting the franchised dealer sector. 

The data revealed a steep rise in the proportion of car purchasing transactions without part-exchanges, increasing from 42% in May 2018 to 58% in March 2023. 

When asked where they are most likely to get part-exchange valuations from, nearly two-thirds (62%) of owners cited the dealer they are planning to buy from, with only 15% planning to use a specialist online car buying platform. 

However, when asked where they would look online for a part-exchange value nearly half (46%) named webuyanycar, followed by Auto Trader (26%) and Motorway (14%).

Dealer websites came fourth on the list with just 13% of owners saying they would visit one for a valuation. 

Our research reveals just how big an impact specialist online car buying services are having on dealer part-exchange volumes, at a time when used cars are in short supply.

While it’s clear that most owners want to use the franchised dealer they’re buying from to take their part-exchange, in a single convenient transaction, they are often in reality turning to online buyers instead to get better prices. 

This suggests many dealers risk scoring own goals by subconsciously undervaluing part-exchanges in the hope of boosting margin. It’s time to realise the old motor trade practice of trying to ‘nick the PX’ has been negated by the emergence of digital disruptors with deep marketing pockets who have become household names, making them attractive alternatives to customers. 

When pricing part-exchanges, sales teams need to be trained to factor in the best possible outcomes for their customers, especially when it comes to valuing cars that would be desirable for their forecourts.

JudgeService also believes franchised dealers have opportunities to retain more part-exchanges by making it easier and more convenient for customers by offering online trade-in tools and by actively marketing their buying services through social and digital channels.  

The full JudgeService 2023 State of the Nation report will be published later this month.

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