Premium Car Brands Are Seeing Growth of Over 60% as Car Buyers Want Premium Service

An elevation in retailer and insurers’ customer service standards to match the surge in premium market share could see increased satisfaction and loyalty.

Expectations from customers regarding their treatment are growing, AX says with more motorists than ever choosing premium brands, the bar for quality customer care has been set quite high. Insurers are also finding that they need to provide like-for-like replacements in the event of an accident.

Lexus is one of these premium brands that you could say changed the way other dealers approached customer care. They centre their practices on omotenashi, the Japanese spirit of hospitality that anticipates and fulfils people’s needs. The influence of omotenashi can be seen in every aspect of their business, with the treatment akin to being welcomed into someone else’s home.

Lexus has topped the Auto Express Driver Power best dealer table every year since the survey was launched in 2002. In addition to being ranked first overall, Lexus dealers were voted best for Helpfulness and Attitude, Standard of Workmanship and Technical Knowledge.

New car registration data found by AX, highlights that premium brands have increased in market share by more than 57% in the last decade. Customers are finding value in the service they receive as well as the car itself, which is causing this flux in the market towards premium brands.

For Customer Benefit and Dealer Profit

The likes of the BMW 1 Series, Audi A3 and Mercedes-Benz A-Class are all regular best sellers. AX argues that the accessibility of these lower premium vehicles could be one of the main reasons for the big increase in the premium market.

Mercedes-Benz overtook BMW in 2018, with 172,238 new car registrations since 2009, representing a 138% increase in growth. Premium car brands also offer much larger financial bonuses for hitting targets than other brands, so it is in some dealer’s interest to pre-register a bulk of their stock in order to hit their target for the quarter. On the face of it, the dealers are selling pre-registered cars for a loss. After all, they buy them new, then sell them for less. If, for example, a dealer pre-registers five cars in a quarter and those cars enable him to hit a target, the bonus that dealer will get from the manufacturer will eclipse the difference between what they pay for the car and what they sell it for.

Everybody Wins

PCP is also a big factor in the number of customers venturing into the premium market. A brand-new top spec Toyota AYGO on PCP could cost you £250 per month. For only £100 a month more you could get a premium vehicle like an Audi Q2, with not a great deal of difference in the amount you put down in the deposit. This is because the value is in the resale after the dealer gets the vehicle back.

If you put down £6,000 for an Audi and pay £350 a month for 42 months, that’s another £14,700. The dealer then takes the car back off you for nothing. The customer is happy because they have only paid £20,700 for a car which is worth £10,000 more than that, and the dealer is happy because they can sell it as a used vehicle for £18,000, maybe more depending on its condition.

More Than a Courtesy

Looking at what this means for insurance companies, with the provision of courtesy cars, for example, Steve Molloy director of commercial sales at AX, said:

“Since 2009, we’ve seen prestige car brands taking more and more market share and, as with any other product, if people are paying more for something they are really proud of, they don’t want to downgrade to a less premium product while their pride and joy is being repaired following an accident.”

For information about how Click Dealer can help independent dealerships to increase efficiency and profitability, get in touch today via 01782 478220, marketing@clickdealer.co.uk or through our contact page.