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New car sales incentive system to boost profitability

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(Posted on Jul 15, 2013 at 06:05AM by William Cosgrove)

Interesting things happening across the pond.

Dealers and manufacturers will soon be given the tool to update, track and measure the effectiveness of finance offers on new cars in a much simpler and cheaper way than has traditionally been available.

CAP is working on a near-automated system that it says will, in quarter four this year, spell the end to what it calls the “primitive” communication process for pricing and other incentive information by moving all the information into a single secure web-based service.

Independent research by Accenture has shown that new vehicle incentives are a manufacturer’s second largest cost after raw materials and dwarfing product development budgets, warranty provision and assembly costs.

The average investment in incentives per unit sold over the lifetime of a vehicle is £2,000.

But it is estimated that £40 million of additional revenue is currently generated over the lifecycle of a typical model using financial offers.

The new product will be called ‘CAP new vehicle incentive’. It will be an additional information stream to CAP new vehicle data.

Nigel Pates, product manager and former managing director of showroom systems' supplier WinWinWorld, said: “Communication of the incentive information to dealers is typically paper-based, time-consuming, error prone, inefficient and – worst of all – completely opaque. With some brands, any given car could be subject to around 12 incentives at one time and a sales manager will be juggling with these each time they talk to a customer. This is time consuming and liable to error.

“It is also therefore very difficult to analyse performance of incentives and hard to even maintain 100% accuracy at all times.”

CAP NVI, he said, will enable dealers to:

* Take vehicle offers to market faster via, for example new car configurators and point of sale marketing material

* Reduce labour costs and time spent by showroom staff learning and updating the latest incentive terms

* Eradicate errors through each incentive being linked by model by the unique identifier the CAP code

* Administer agreements with customers correctly each time

* Eliminate profit loss due to claim error

* End the need for rebate claim negotiations

* Understand which incentives are optional or mandatory

* Free up staff currently tied up administering incentive information.

Subscription costs to the system for dealers will be based on a sliding scale up to £590 a year, dependent on their existing data supply contract with CAP.

Manufacturers paying to access NVI will only be able to see data on their incentives, dealers on only the brands they offer.

Pates said: “CAP NVI will unlock millions of pounds of additional profit opportunity for manufacturers, drive out costs and eliminate errors.

“For the first time they will be able to monitor the impact of incentives, respond quickly to changes in the market, get more profit out of each model by managing lifecycle decay more effectively with incentives and gain instant clarity on dealer sales activity and incentives agreed per vehicle.”

> More details at www.cap.co.uk/products-and-services/new-vehicle-incentives.

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