Auto Trader is set to roll-out a guaranteed part-exchange tool underwritten by Cox Automotive to its online car marketing platform.
Designed to provide retailers with better qualified buyers and a more profitable route to sourcing stock the GPX offering is set to launch fully in early 2021 and is currently undergoing beta testing with more than 100 car dealers across the UK.
The offering will provide car buyers with a guaranteed part-exchange price for their current vehicle which will be underwritten by Manheim Auction Services using a combination of Auto Trader’s valuations and current auction data.
Auto Trader’s commercial product director, Karolina Edwards-Smajda, said: “Our aim is to create opportunities for dealers to sell more vehicles and to support them to operate as efficiently as possible through providing insights and guidance and developing innovative product solutions such as Guaranteed Part-Exchange.
“Guaranteed part exchange also improves the online car buying journey for consumers, the need for which has been accelerated dramatically as a result of the pandemic.”
Edwards-Smajda acknowledged that sourcing stock effectively remained “a real challenge for many dealers”, with reduced supplies and high consumer contributing to a 23rd consecutive week of used car prices rises on Auto Trader.
She said that many retailers were either having to overpay through constrained traditional channels, compete for shrinking stock, or worse, miss out on potential sales opportunities driven by the exceptional demand in the market.
“We wanted to create a solution that not only makes the process more efficient, but also keeps the stock among dealers and helps boost their profitability”, she said.
Recent research conducted by Cox Automotive’s stock funding division, NextGear Capital, revealed that almost a quarter of used car retailers had turned to Government-backed COVID-19 recovery loans or overdrafts to fund their forecourt stock since lockdown.
As well as helping retailers stock their forecourts, GPX aims to create valuable sales opportunities, according to Auto Trader, attracting highly qualified buyers who are ready to purchase.
It said a recent survey of 1,320 consumers showed that nearly three quarters (73%) said they would be more likely to visit a dealership if they had a guaranteed part-exchange agreed in advance.
The same research revealed that 29% of car sales break down over part-exchange negotiations.
GPX will require car buyers to answer a series of questions to determine the condition of their car before provision of a guaranteed part-exchange price.
Once the consumer has their guaranteed price, they can send their details to the retailer and progress the deal, subject to the car being accurately described.
Auto Trader said that, because the guaranteed price is underwritten, GPX provided “limited risk to retailers”, adding: “If the vehicle doesn’t fit their stock profile or if the deal represents a risk the retailer isn’t willing to take, they can simply dispose of it through the Manheim underwritten disposal service.
“The car will be paid for and collected from a retailer’s forecourt within five days.”