Whitepapers

Negative equity — when a loan balance exceeds the vehicle's worth — has been exacerbated in the post- pandemic era, fueled by soaring interest rates, inflated car prices and extended loan terms introduced during inventory shortages. As the market normalizes, customers who purchased a vehicle over MSRP are realizing they may owe more than what their vehicle is worth. For dealers, handling conversations about negative equity requires a delicate balance of empathy and transparency. How to Handle Negative Equity Conversations with Customers » Assess the Customer's Financial Position: Beyond just knowing how much a customer owes vs. their vehicle's current value, analyze each buyer's financial situation. This includes looking at their loan details, credit history and overall financial health. » Explore Options Based on Individual Needs: Each customer's situation is unique, and solutions should be tailored accordingly. For instance, refinancing might be a viable option for some, while for others, it might be more about restructuring their current loan. » Provide Guidance on Vehicle Selection: If a trade-in is part of the solution, help the customer select a new vehicle that meets their unique needs, buying preferences and financial considerations. Building Long-Term Customer Relationships In the face of negative equity and increased costs, building lasting customer relationships is key to promoting long-term loyalty. This requires sales teams to offer value-added services that resonate with the customer's needs, encouraging repeat business. » Offer Customized Service Plans: Create service packages or maintenance plans tailored to the customer's new vehicle and driving habits. » Engage Customers on a Regular Basis: Keep in touch with customers through newsletters, service reminders and personalized offers based on their interests and purchase history. » Collect Customer Feedback: Regularly gather and follow up on customer feedback to improve services, demonstrating a commitment to meeting their evolving needs. NAVIGATING NEGATIVE EQUITY: STRATEGIC CONVERSATIONS WITH CUSTOMERS

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