By Terri Jo Neff |
Many members of the Arizona Automobile Dealers Association spent 2021 struggling to get popular makes and models onto showrooms due to supply chain issues. And it looks like 2022 will hold even more challenges for those buying and selling new cars, although a recent survey provides a suggestion to make the buying experience less costly.
On Dec. 15, the Federal Reserve Board released a policy statement which sets the stage for an interest rate increase next year. In total, three rate hikes are expected in 2022 if a set of fiscal events occur as projected.
As if the increased cost to finance a new vehicle isn’t enough, the rising cost of insurance premiums next year is another economic challenge expected to impact auto sales. In 2022, rates are expected to increase five percent, even among popular “discount” insurers.
This will likely drive some buyers away from a vehicle they could otherwise afford to finance but cannot afford to insure, according to DealerPolicy.
To better understand the role of insurance in the auto-buying process, Vermont-based DealerPolicy recently conducted a survey of auto dealers and car-buyers about the impact premiums have on new car sales, 70 percent of which occur at a dealership.
What DealerPolicy found is that a large majority of car shoppers believe auto insurance is inseparable from the overall car buying experience. In fact, 72 percent of prospective car buyers considered the cost of premiums before signing a sales agreement.
“For most people, insurance consideration begins before the vehicle is purchased,” the survey report states, adding that nearly half of buyers indicated the cost of auto insurance influenced their decision of what vehicle to purchase.
DealerPolicy found that 90 percent of the responding dealerships admitted insurance coverage has at times negatively affected the ability to make a sale. But the survey highlights a window of opportunity for dealerships to address the reality that 70 percent of buyers expect their insurance rates to go up but only 29 percent bothered to shop around ahead of time for a better rate.
According to the survey report, 71 percent of buyers responded in the affirmative about welcoming an opportunity to get assistance with auto insurance at the dealership during the purchase process. Such assistance could be as simple as a referral to a local independent or franchised insurance agent or someone at the dealership connecting the buyer by phone with some insurance companies.
Dealerships could even arrange for an independent or franchised agent to be on-site.
“It’s clear that there is room for improvement for both audiences when it comes to auto insurance,” the survey concluded.
One option is utilizing a digital insurance marketplace where buyers can easily shop for competing car insurance from their smartphone while in the dealership showroom. The survey found dealers and buyers overwhelmingly agreed such an option would improve the purchase experience.
It would also ensure better owner satisfaction by providing drivers with an understanding of how much insurance will cost even before the vehicle is driven off the lot, the survey found.
Tips and information about purchasing a new vehicle can be obtained from any member of the Arizona Automobile Dealers Association. https://www.aada.com/Home/DealerLocator/