Finaccord, a financial market research group, conducted a study across 26 countries regarding the financial impact of up-selling consumers on “extras” when they purchase a new car. The numbers are staggering on how it’s affecting car dealers and manufacturers profit margins.
When dealerships partake in selling insurance products like gap insurance, extended warranties, auto insurance, roadside assistant programs and creditor insurance they benefit wildly. According to Finnacord, their study shows the importance of the said factors to the automotive industry in the whole of Europe.
In the countries that were included in the study, it was found out that around €16.8 billion worth was spent on insurance policies for the year 2010. This amount is equivalent to the 4.6% value of both used and new cars when they are sold in retail. According David Parry, a consultant of Finaccord, insurance policies, warranty and assistance services are of great importance in the automotive trade since they can be used as a tool to close deals as well as provide long term revenue with renewals.
For some of the countries that are part of the study, their sales on financial services are twice higher than the average sales for the entire Europe. In Russia their revenue is 8.5% of the value of the cars that are sold, which is 9.8% for Slovenia. Whereas in Ireland and Finland, the sales of financial services are weak, which is only 1% of the total sales of cars.
The study also concluded that auto insurance is the most important in all the countries that were included in the study. In fact, the amount is 53% of the total revenues from the sales of automotives – 98% in Russia and 30% for France and the UK. In Germany, an estimated €1.232 billion comes from the extended warranties and other services.
Parry concludes that for manufacturers, car dealers and importers, the insurance, warranty and assistance products are very important to them. Despite the competitiveness in the automotive industry, these factors can increase their sales.