Motor Trade Practice Group Bulletin

Managing the increased risk of unaccompanied test drives

In this edition we look at the rise of unaccompanied test drive theft, and how to mitigate risk whilst keeping your customer’s journey at the forefront.

The pandemic and regulation around social distancing have decreased the number of accompanied test drives dramatically. Even before lockdowns came into place, the trend showed that customers found test driving a car without a sales executive far preferable.

Unaccompanied test drives offer a far better experience for the customer, allowing them to test a car for comfort, equipment and handling in a less pressured environment. Many feel more positively about a dealer when offered this as an option, welcoming the opportunity to make a more informed purchase decision.

Increased thefts of vehicles

The automotive industry is experiencing an increase in the number of thefts during unaccompanied test drives. For retailers, this is an area of great concern. Not only do they lose an asset but will also incur an excess which can range from 15% to 25% on the value of the stolen vehicle depending on the insurance solution in place.

As a customer-led industry, retailers cannot ignore the positive uplift in sales following unaccompanied test drives. However, this shift in customer expectation means it is vital to protect against the possibility of financial loss.

Manage the risk

It is important that dealerships implement procedures aimed at mitigating this risk.

1. Ensure your sales team follow a strict process when arranging unaccompanied demonstrations.

2. Consider quality short-term insurance cover, so that in the unfortunate event of an incident, the right protection at the right price is in place and your Motor Trade insurance policy is protected.

How did the customer arrive on site?

We recommend extra vigilance in the following circumstances:

• The customer has arrived at the dealership, without a vehicle and therefore has no asset with them.
• The value of the vehicle they are showing interest in is of high value and performance.
• The vehicle they arrived on site in differs greatly in terms of value and quality from the vehicle they intend to test drive.
• The vehicle they arrived on site in does not belong to them. We have seen instances where the vehicle they arrived in belonged to another dealership for example.
• The source of enquiry was online, and the customer arrives on site shortly after their initial enquiry.

Does their documentation meet your requirements?

• Always check that the photograph contained on the driving licence matches with the person presenting it and driving the loan vehicle
• Identify whether the licence could be fraudulent by following the steps and guidance from PIB
• Request a second form of identification, which needs to be cross checked and matched with the licence. Ensure this is original and that there is nothing at odds with the quality, dates etc.
• If you take copies of any supporting documentation, ensure it is held securely and in accordance with your data retention policy, in order to comply with Data Protection regulations
• Take a photograph of the customer and ensure this is a match with the photograph contained on the licence

For further protection we suggest the following, additional measures:

• Confirm the customer’s own registration number and that the vehicle is in the car park.
• Check the test drive vehicle keys on its return to ensure these have not been swapped for a ‘fake’ set

By ensuring these measures are put in place, dealers can enhance the customer experience and boost their bottom line at the same time – whilst reducing the likelihood of financial loss.

Ross Barnitt, Regional Development Director commented: ‘This data from Cooper Solutions gives a great insight into how customer expectations have changed. It’s clear that unaccompanied test drives are here to stay. The crucial issue is that retailers protect any financial risk to their businesses whilst maintaining excellent customer journeys.’

Our Motor Trade Practice Group brings expert teams together to help manage existing and emerging risks and to improve profitability within the automotive sector. The Group covers three key areas:

PIB Insurance Brokers: Delivering the right protection at the right price

PIB Risk Management: Managing risk across your business

Cooper Solutions: Analytics and insight to drive performance and profitability

 

08.12.21