Tag Archives: Consumer Direct

buying a new car, car dealerships

The used car shopping game

Most women know there is a 50% chance of buying a bad car when they go shopping for a secondhand one even when it shines so appealingly on a dealership showroom forecourt.

But who of us has heard of Akerlof’s economic law? Very few I’d suggest yet it applies well in the Used Car Market. I first read about this in Tim Harford’s book ‘The Undercover Economist’ – it explains that when one party to a sale has inside information and the other does not – markets do not work as well as they should.

Hence the 72k used car complaints recorded by Consumer Direct last year I suppose, costing innocent customers an estimated £85m to put right.

Take for example the case where a car dealer buys his stock of used cars, knowing fairly well from experience whether they are good or bad individual buys. Price, mileage (genuine or otherwise), service history, type of mileage, colour, condition; that sort of thing dictates the price he’ll charge knowing what he can make it look like with a bit of elbow grease and tlc.

But the customer doesn’t have the same background insight when she walks into the showroom. If she makes a low offer and gets the car, perhaps it was a lemon because the inside knowledge the salesman relies on is telling him that’s all it’s worth so take it… whereas a good car is worth more, hence his holding out longer for the asking price.

Clearly Akerlof knew his used cars (this works in other markets too of course) and that this is a hit and miss game that buyers and sellers play.

In general, used cars tend to be cheap and poor quality borne out by complaint levels in this area. Sellers want as high a price as possible so they’ll hold out for a better price for a good car but they can’t prove it is a good car so often the good car will sit around for longer.

Whereas a buyer who doesn’t understand the game goes away with a bad car unwittingly, thinking she has got a good deal. She hasn’t of course because the serious bills will start to arrive just as soon as any promising warranty runs out. That’s called Murphy’s Law. Marketers describe the sickening customer realisation that they’ve been shafted as ‘customer dissonance’ and I imagine we’ve all felt that at some time of our lives and determined never to go back…

The reality is that savvy car buyers don’t play a rigged shopping game like this one but there are many unsuspecting customers who don’t know the rules of the used car market and do end up playing here. Sadly many of them are females who trust the dealer who tells her what he needs to, to get the car off his forecourt.

Akerlof’s point is a serious one because this isn’t just a market where shoppers get ripped off, it’s a market that isn’t working properly because buyers want proof of value and VERY often sellers can’t prove this.

Of course the sensible advice is to buy a used car with a HPI type of finance check and then get it inspected for its mechanical fitness (at a discounted rate c/o DEKRA if you are a member of FOXY Lady Drivers Club) within the 6 months when you may be able to get a dealer to take it back or put things right, based on proof.

A reassuring female factor is likely to be an Approved Car stamp by a franchised dealership but the reality is still that the dealer salesman knows a lot more about the car than the customer and they need to sell it for as much as possible because their commission income is involved.

Certainly the customer needs more ammunition on her side so she can wise up in these instances. Depending on the value of the car I’d definitely counsel investing in checking out the mechanical condition of any secondhand car c/o car inspection experts, Dekra, as soon as possible after purchase; only then will you know if it’s a plum not a lemon.

FOXY

Please see OFT advice here and remember that if you are a member of FOXY Lady Drivers Club we’ll help you sort any used car complaints out – the last resort is that we’ll share really bad feedback within the Club so that other women don’t go there in future.

buying a new car, car dealerships, women drivers

Secondhand rose car buyers

If you can’t afford a new car, with or without a scrappage, swappage or part exchange deal then it’s a used car for you, especially in a recession when money is tight. And very often that is the foxy thing to do regardless your budget, providing you choose the right model, a well looked after car and get a fair price. Less depreciation certainly.

Sadly many don’t get the new car buying process right and in 2009 HM Government’s Consumer Direct received 50,790 complaints about second-hand cars bought from independent dealers, up by 8% on the previous year and well over double the number of complaints about TVs and mobile phones.

Knowing that at least half of those buying a new car are likely to be women drivers, it is fair to imagine that a higher percentage of them will be buying and driving used cars than men. I say this based on speaking to many members of FOXY Lady Drivers Club where the typical family has children and two cars with Dad more likely to be covering motorway miles in the newer car and Mum more likely to be running the older car and doing local mileage with children on board.

And of course many secondhand cars are bought from private individuals who may or may not be known to the buyer. It is only when things go wrong (private sales are not recorded in the Consumer Direct 50,000 complaints remember) that the driver learns that they have no protection in law…

Yet as few as 20% of all HPI car checks are carried out by women drivers which means (I am guessing here) that they are more likely to have subsequet problems and be the complainants (or the affected drivers at least) about Arthur Daley-like practices in today’s secondhand car sales industry.

The Consumer Direct survey information is used by the Office of Fair Trading, Trading Standards and other enforcement bodies so it’s good news that the OFT has finally launched a report into this selling scandal and will tell us what they find in May this year…

I did email them to see if they wanted my feedback but they didn’t reply ;-(. This is what I would have said, if invited…

  • Poorly maintained, badly serviced and shoddily repaired cars are potentially dangerous so those who sell them should be named, shamed and fined heavily.
  • Based on my anecdotal experience, women drivers are particularly vulnerable here, especially older women living on their own and who think they can trust car dealers. They need to know their options and their rights.
  • All used cars sold via a dealer should be sold with a HPI check – whether a franchised or independent dealer.
  • All used cars sold via a dealer should also be sold with a signed and dated checklist to show the customer that all the important and safety related items have all been checked and are either fine or need attention.
  • All used cars via a dealer should be sold with a minimum of a 6 month warranty (as in law) which that dealer must honour.
  • All used cars sold by private individuals should either be sold caveat emptor (where SORN or for restoration project) or with a HPI, MOT and local car check carried out by an authorised garage. Then the buyer knows what he or she is in for… after all we have to declare the truth to sell a house and there are serious consequences now of not doing this.
  • Finally an unbiased organisation should adjudicate when sales go wrong. It would be good to see the onus put on helping the buyer more than the seller; make any conciliation service friendly and free and help the motorist take matters further in law if need be. I don’t think that a service involving dealers should be run by a motor industry organisation with a vested interest in selling trade membership, for example.

Of course it will be difficult to determine the reasonableness of all this when the dealer has bought a car online/at auction and depending on the age and mileage of the vehicle.

But when you see ITV’s Debbie Dingle in Emmerdale collude with a driver to sell a cut ‘n’ shut car that is unsafe and illegal you know that the law isn’t doing its job here and the cost of that is being borne by innocent motorists looking for a bargain and who are too trusting to realise that if a car is too cheap there will be a very good reason.

FOXY

“It is our resonsibilities, not ourselves, that we should take seriously.”
Peter Ustinov

female friendly, garage services, women drivers

Female friendly garage choices for consumers

I heard on the radio this am that Consumer Direct is back campaigning for regulation in the UK garage services industry.

It would appear that the latest car ‘service and repair’ code has yet to hit the spot for independent garages. Out of an impressive c5000 subscribers since last August, some 4000 are thought to be franchised dealerships who were always to be the financial backbone of the scheme and were told to sign up by their manufacturer bosses – Ford, Mazda and Peugeot among others.

This imbalance is important because motorists need choices to suit their car, their motoring budget and where they live… and franchised dealerships are usually a good bit more expensive than independents.

Taken to its conclusion if the new Motor Code were to start to promote itself in a big way to consumers (which they certainly have the money to do) they could, in effect, create more complaints than ever because motorists will be paying higher rates to franchised dealers in areas where there is no choice of an independent garage. I’d complain if I felt I habe been encouraged to pay over the odds, unnecessarily.

However FOXY doesn’t take sides in this debate because it knows only too well that women drivers come in all shapes and sizes and usually know very well what they want…

But women who want low cost motoring bills to keep a cherished older family car (not a banger…) on the road want low cost garage bills otherwise they mightn’t bother getting their car serviced regularly.

Tell them that they need a Motor Code dealership to repair their car and they might think that they are to expect to pay extra for quality.

Whereas the real foxy choice, clearly available to all motorists, should be to identify one of the best local garages or dealerships in their area, based on measurable qualifications, an investment in quality and a commitment to customer service to suit their needs.

I agree with Consumer Direct that the motorist continues to fail to find her and his best local choices to date. It’s interesting that this organisation is a part of the Government’s BERR department and sits alongside the OFT which is supporting the industry’s Motor Code intentions (for automotive services and repairs).

I also suspect that few earlybird subscribers (such as car dealerships that well exceed the minimum motor code industry standards of honest and fair services, open and transparent pricing and work to be completed as agreed) spotted that they are to pay a hefty fee £’00s every two years or so to be inspected.

Assuming that the complaints Consumer Direct pick up on are  similar to the ones members of FOXY Lady Drivers Club tell us of, these will be about shoddy workmanship, overcharging and patronising customer service.Hence my belief that the female friendly FOXY Promise is a better benchmark of standards and that the garage services  industry is long overdue a female friendly image makeover.

Needless to say, it’ll be a real shame for the consumer if industry prices (already much higher than in France, for example) need to rise because of regulation fees, but this may be what is needed for UK motorists to get a fair deal and for older cars to be safer on our roads in future. And for the industry to identify and promote higher standards in future.

Bring it on guys.

FOXY

“Four words sum up what lifted successful individuals above the crowd – a little bit more. They did what was expected, and a little bit more.”

A. Lou Vickery.

buying a new car, women drivers

Welcome OFT study into used car market

It’s no surprise to me that women drivers are more apprehensive than men in garages and car dealers.  It’s not just that we feel unwelcome in many of them but it’s also because we are so often the butt of the joke, the topless pin-up insulted in the workshop, patronised even when we know what we want and, worst of all perhaps, overcharged or sold things we don’t need and wouldn’t have wanted had we known that, or been given a choice.

What the recession has done is increase the number of motorists actively planning to buy used rather than  new cars in the near future, so there is no avoiding the Arthur Daley’s and Swiss Tonis that do exist out there. With almost 50% of used cars bought by female motorists I am always surprised to find that so few get a proper used car check before buying – especially when from a private seller where they have no rights in law otherwise. Recent research carried out for FOXY Lady Drivers Club confirmed that only 20% had got the likes of an HPI check before buying used.

They then join FOXY to help them sort out the problems they inherit…  so we mustn’t grumble of course ;-).

Now we hear that the Government’s Office of Fair Trading (OFT) is to identify the unacceptable  number of motorists who complain about used car sales to them (c68,000 cases to Consumer Direct  in 2008). This will take the form of a study into this £35bn market to see how its processes fare in terms of robustness, confidence and clarity.

I will be interested to see how this research develops.  The industry can certainly be improved but the solution isn’t easy. Think how the recommended service periods have been stretched and stretched  for new cars, so that cars get less attention in their early stages but operating costs are reduced and therefore more attractive to fleet buyers. In turn these business cars are then hammered up and down motorways (by and large good for engines…) but with the minimum of maintenance and servicing during the first three years or 60,000m. They are then dumped on the used car market at prices which reflect their future saleability.  And if the price is low enough, there’ll always be a market to turn a quick buck and pass it on regardless…

I believe the used car market needs an agreed minimum standard of  ‘approved’ used car status where we know that the car comes with a minimum  ‘quibble free’ 6 month warranty, ideally a 1 year warranty. There must be a way to do this that takes into account the selling price, auction situations, the (authentic?) mileage and whether the car has been looked after regularly (and that the service history stamps are authentic of course…).

Very few women seem to look at the service record before falling in love with a car and yet who of us can deny that a well maintained car (by a genuinely good garage) will be more economic to run in future and an all round better buy that the cheap car that has been flogged to death with minimum tlc in between.

And I hope the OFT study covers used car warranties too because they don’t all cover as much as you’d think.

I’d also like more motorists to know that a well maintained used car can be as green if not greener than a new car when you factor in the true CO2 costs of its production and delivery to the showroom. Those that can’t afford to buy new shouldn’t be made to feel inferior or to hear their cherished family car described as a ‘banger’ simply because they one that’s 10 years+, eligible for a £2000 backhander if they sign up to the ‘scrappage’ scheme and have it destroyed in exchange for a new car.

After all, we are encouraged to recycle and re-use rather than throw away and buy new. And fleet car buyers will continue to buy new of course which represents at least half  of the new car market.

Something for everyone there, to suit our needs and budgets.

FOXY

“It is our responsibilities, not ourselves, that we should take seriously.”
Peter Ustinov