Well-traveled used cars merit lower-priced products

Jamie LaReau covers auto dealers for Automotive News

In today's economic slump many practical folks see value in high-mileage used vehicles. Vehicles with 80,000 miles or more account for about a fifth of franchised dealers' monthly used-vehicle sales. Some dealers expect that pace to continue in 2012.

That's why finance and insurance providers need to keep up with the changing mix of dealers' used inventory by offering lower priced aftermarket products for those who buy well-traveled used vehicles.

If insurance providers "have taken a wait-and-see attitude thinking that the mix will return to the old normal, then it's time to be proactive and sit down with their data and redesign some of their offerings to fit the new normal," says Tom Wilson, managing director of Front Range Dealer Services in Castle Rock, Colo.

"Most buyers of inexpensive high-mileage vehicles expect that they're not going to get a prime piece devoid of any issues," Wilson says. "If there are reasonably priced protection options available, then F&I will have a running shot at sharing in the profits."

But what's reasonable?

F&I managers say the retail prices of tire-and-wheel plans range from $400 to $800, windshield treatments cost $300 to $400, and paint and fabric protection is $300 to $800.

Some finance managers say such prices are reasonable to protect a high-mileage used car when a person is spending several thousand for it.

You can reach Jamie LaReau at jlareau@crain.com.
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