With average delivery times stretching to two months, new cars that are not ordered within weeks are likely to be handed over and paid for after the new year VAT increase, needlessly costing their buyers quite large sums.

The much-heralded Scrappage Scheme, though extended, is not expected to last much into the new year, either.

Tim Wait, Director of CarQuake, the UK’s foremost new car website, comments: “At the moment, thousands of new car buyers are walking blindly into substantial losses. On a £20,000 car, the January change in VAT alone could easily be worth a the equivalent of alloy wheels, front and rear parking sensors or metallic paint finish, while the end of Scrappage could make a substantial difference to the type of car they can afford. And all they have to do is buy now, to avoid paying later.”

‘Buy Now, Don’t Pay Later’
On January 1, 2010, VAT is to be restored to 17.5%, with the biggest impact on high ticket purchases such as new cars. On average, the VAT change will push up the price of a £20,000 car by around £500.

“Many new car buyers don’t realise how important timing is,” continues CarQuake’s Tim Wait. “If you order a car in December and it’s delivered in January, you’re likely to be making your main payment in January – whether it’s cash or on credit. And therefore you pay January’s VAT. And the time to avoid that scenario is now.”

Buying now can still also be best advice in general car pricing. Wait adds: “Retailers have been faced with downward pressure on prices: survival means they’re now much more competitive. But manufacturers are pushing prices up. And as Scrappage comes to an end, the new year won’t just see higher VAT but also higher retail prices.”
Speaking for the consumer, Tim is quick to point out that there are some very good reasons to buy a new car in the next 4-6 weeks…

• Only 15% VAT to pay if you buy your new car before the end of 2009
• Strong second hand market for used cars, ensuring that you get a good part exchange price
• The opportunity (where appropriate) to participate in the government Scrappage scheme which has been extended for a further 100,000 vehicles but is likely to run out by the end of the year
• The possibility of avoiding manufacturers’ 2010 price increases

He concludes: “Based on our experience, we recommend that consumers act while market conditions are so favourable, a condition that only has a few more weeks to run. The future promises higher car prices, higher interest rates and higher VAT. Our advice is definitely: Buy Now – Don’t Pay Later.”

Though most think that CarQuake is all about the price, something we pride ourselves in is the service offered by our dealers. When we claim that we offer the easiest way to buy a new car, what we mean by this is both a good price AND a good service. Recently, one of our staff put this to the test.

What We Were Looking For

The target car was a Ford S-Max Titanium. The detail of the spec was to come out of the conversations, but we decided to try the ‘traditional’ routes to market as well as the new ones… and here’s how they got on…

The ‘Local Dealer’ Experience

Offer: £16,995 for a New S-Max with Scrappage including a hidden £800 finance ‘bonus’

“We visited the local dealer on a Saturday afternoon, it was very quiet and there were staff around. Yet myself, my pregnant wife and our two kids were ignored. When we finally got hold of someone, the dealer didn’t even have a single new or used S-Max on site to show us because the business manager had taken it on holiday (why he couldn’t have taken any one of their Galaxy models was a question that sprung to mind, but was not asked!). They didn’t qualify us, capture our contact details or try to follow us up, and we were told that they would have a car in about 10 days time – when the business manager returned from holiday. They had two other locations, but didn’t attempt to get a car sooner for us.

“So, we returned and had a viewing and test drive and, to be fair, these were done properly. We decided we wanted panoramic sunroof and half-leather. So, this should have made the overall ‘deal’ about £18,500. But the finance offer was withdrawn, the special price was allegedly no longer available to them that quarter (even though it was their fault for the delay)… and suddenly they were asking for £20,000 for the car saying that no other Ford dealer would be able to do better than that. We left…

“We were phoned up a month later by another member of staff who informed us that the previous salesperson had left the business and asked whether we were still interested. No, we’d ordered elsewhere. The salesperson wasn’t particularly concerned as to reasons why – but we explained that we had bought an S-Max, but just not from them.”

Time wasted: 3 hours
Price differential: £1,500

Final Price: £20,150

The ‘Internet Best Deal’ Experience

Offer: £17,395 for a New S-Max with Scrappage inc. Metallic Paint

“So, at the same time, after visiting the local dealer first (and giving them the first opportunity) we also searched online and there was a great deal from a large national dealer group. We filled out the form on the website and sent it in. The dealer called up that afternoon, but we missed the call and it went to voicemail. It was a pretty garbled message, and we called back and left a message with the receptionist.

“We waited a week. Called again, the salesperson was apologetic and said that our message was not passed on to him. We went through the deal and, guess what, it had changed too. The metallic paint offer had somehow disappeared and because it was a factory order, the price had gone up. From expecting to pay about £18,750 the price was now £19,290.

We said that we would continue to look around for the car, and they said that they’d get back to us at the end of September when they knew what deals were available for the last quarter of 2009. We have still not received that call. But it’s too late in any case.”

Time wasted: 1 hour
Price differential: £500

Final Price: £19,290

The ‘Straight’ Experience

Offer: Price Match (within reason) Promise

“So, we called the next nearest dealer, just explained we were cash buyers and wanted to buy an S-Max, but it seemed that the two dealers we had previously spoken to were unable to match their advertised offers with real prices to us. Initially the dealer didn’t think they could compete, but with the shenanighans of other dealers, we returned to them and had an exchange of emails and were able to agree, in principle, what the price would be.

“We visited the showroom and by then we’d had the test drive and knew exactly what we wanted. We went through the paperwork and put a deposit down there and then for the new car and will be taking delivery late October. We’ve invited this dealer to participate on CarQuake… now they’re our kind of dealer.”

Time used: 2 hours
Price differential: None

Final Price: £18,780

It’s one of those things that you watch and, whilst it doesn’t mean absolute success or failure, it’s rather like a barometer or a thermometer – it is a measure of popularity.

We often get asked ‘how do people find CarQuake’ and whilst we can point them to searches like Best Car Deals, New Cars for Sale and Cheap New Cars as indications of good search engine performance… it’s still not enough.

So, Where Do We Stand?

Well, just another observation to add to the mix – CarQuake is now Page Rank 6. Whilst this doesn’t mean anything in terms of business performance it is a testament to where we’ve got to that when comparing with much ‘bigger’ brands, we hold our own nicely…

Page Rank 6 (same as CarQuake): Autotrader, Yahoo! Cars, Top Gear

Page Rank 5 (lower than CarQuake): Exchange and Mart, Autoquake, Moneysupermarket

Page Rank 4 (considerably lower than CarQuake): Broadspeed

Page Rank 3 (very low): UK Car Discount

We’ve even got a higher ranking than some of the Manufacturers (we won’t mention any names!).

To be fair, we still have a long way to go… but the signs are very encouraging.

We access the CarQuake site on Monday morning and are astonished to find out that we had a really busy end to November. Sunday’s traffic was the best single day of traffic in November…

Given all the tools at our disposal, we look at our analytics – traffic is up, particularly direct visits and on searches for ‘CarQuake’ in the search engines. So, what does that mean?

Another look and we see that direct links from TimesOnline.co.uk have increased tenfold. So we go there, do a search and find this article: ‘A Brand New Car, I’ll Take Two Please‘… and there we are… The best offer for a SAAB in the UK. Then, we find out that the same article was published in the Sunday Times. Unfortunately, we are unable to correct that CarQuake also has the cheapest new land rover discovery prices in the UK… and that CarQuake is not a ‘broker’ – it puts buyers directly in touch with supplying dealers! Still, publicity is good.

In terms of the stats, here’s the interesting bit – the traffic on the day from Sunday Times online was about 15% of that estimated from the printed newspaper (direct searches and traffic). However on Monday, the online version was more like 40% of the traffic estimated from the newspaper and we expect that by the end of the week, the online version will have overtaken the print and will for the foreseeable future.

It pays to be as smart with the way you measure media as with how much you spend, and episodes like this really help us evaluate both!

The Right Experience

The internet car buyer is no different to any other online customer. They expect a professional, secure, smooth transaction and some kind of incentive for taking this route to purchase. Brands who recognise this end up not only benefiting from passing on the increased efficiency of the internet, but also end up with very satisfied customers – CarQuake’s CSI ratings are far higher for our dealers than through any other source of business.

The Real Deal

Online customers also expect a proper offer and therefore ‘deal’ for their enquiry. After all, they are not choosing to take the high ticket and overhead route… they just want a decent price and not to be messed around. All other consumer products have better offers online than on the high street – why should cars be different?

So, Where Does Brand Loyalty Fit?

Recent research shows there isn’t much loyalty and, if anything, it’s decreasing. All the more rapidly in times where personal spending is much more carefully considered. We can see from our site measures that customers coming in on one brand may end up enquiring on a completely different one.

We note that the brands where deals are there to be had online seem to be the same ones who are doing well in uncertain times. We also note that those encouraging customers to continue using the dealer network are also benefiting from high satisfaction.

We can also receive emails from customers that provide supporting evidence for all we’ve covered. For example…

“I couldn’t get a deal on a MakeX car, so I went for a MakeY… I liked the sliding door, loads of gadgets, much more space. The dealer offered interest free finance too.”

“What an amazing site. I was contacted by a Make Z dealer and confirmed purchase today. Less than 48 hours after submitting my request. Many many thanks” (this arrived as I was writing this post).

The customers speak for themselves… we need to continue to be ready to respond to their needs.