Episode 3 - What's love got to do with it? (When buying a car)

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Show notes

Are you on the hunt for a new car or upgrade? We discuss how advertising can influence buyers, the best time to buy a new vehicle and what safety features to look out for. Plus we compare how Queensland petrol prices stack up to other states.

Guests

  • Rob Hudson, Managing Director Clemenger
  • Steve Spalding, RACQ Head of Technical and Safety Policy
  • Nathan Torpey, RACQ Journalist 
  • Renee Smith, RACQ Head of Corporate Communications

Transcript

You're listening to RACQ Living.

Anthony Frangi: Hello and welcome to the RACQ Living podcast. I'm Anthony Frangi. Are you on the hunt for a new car? Does advertising really influence what we buy?  And when is the best time to purchase a new vehicle? These are some topics we'll be canvasing in today's episode, plus how Queensland petrol prices stack up against other states.

Anthony Frangi: Joining me on today's panel is Renee Smith, the RACQ's Head of Corporate Communications; Steve Spalding, Head of Technical and Safety at RACQ; car enthusiast and RACQ Journalist, Nathan Torpey; and Rob Hudson, Managing Director of advertising agency Clemenger. Welcome everyone.

Renee Smith: Thanks for having us.

Nathan Torpey: Thank you.

Anthony Frangi: Renee, let's start with fuel. From your point of view, where does Queensland stand when it comes to fuel, when you look at other states?

Renee Smith: We're getting ripped off, particularly in Brisbane. When we compare what we get charged to the other states, more often than not, we pay more than Sydney, more than Melbourne, and these are bigger cities than Brisbane. And there isn't any good reason that we should be copping it more than the other states. Competition really does play a big part. It's not about the number of service stations that you have in a town or a city. It's how they behave. And motorists do have a role to play in all of that as well.

Anthony Frangi: I was told if we had more independence in Brisbane, for example, then there would be more competition. Is that true?

Renee Smith: Yeah, well independents often do have the lower prices, Coles one of the big offenders, BP also, they're the first to jack their prices up when we go into that expensive phase of the price cycle and they're really slow to discount as well.

Renee Smith: And so we see those major retailers being the worst offenders more often than not.

Rob Hudson: How do we actually compare the number of people driving cars cause clearly there's a supply and demand aspect to all pricing?

Renee Smith: Well obviously a town like Sydney, or a city like Sydney, and one like Melbourne, they've got more people than us, and therefore more people driving cars as well they also have more public transport than we have in Brisbane but as we look around, we have such a big state. Queensland has so much space to cover and we do a lot of driving and our motoring costs in general are pretty expensive here and that's not just fuel.

Nathan Torpey: So across Queensland, is there a segment that more expensive than another like are we paying more in Brisbane than there might be up in Townsville?

Renee Smith: In Brisbane compared to regional towns, there is an advantage that you have a price cycle and if you shop smart in the cycle, you can benefit and the cycles are really confusing to most motorists but when we get to the bottom we're often close to wholesale and the cycle goes up and down, whereas, in regional areas, so outside of Southeast Queensland, the prices stay pretty flat.

Anthony Frangi: I remember when Tuesday was the cheapest to me though,

Renee Smith: Those days are long gone unfortunately. So we went from having a weekly cycle. Where maybe people remember cheap Tuesday was the time to fill up, then it pushed out to more like four nightly. Now, it’s gone to four even five weeks, the petrol price cycle which involves very high 'highs' and then we sort of sit there for a little and we trickle down a cent or two litre each day, until we get to the bottom of the cycle again.

Anthony Frangi: But the high seems to be longer.

Renee Smith: Its unpredictable, and when those prices shoot up too, they don't go up slowly like they do when they come down. They shoot straight up without warning. You could be driving to work one morning and think, 'Oh, there's a good price. I'll fill up on the way home,' and it's too late.

Anthony Frangi: Yeah.

Renee Smith: They are basically convenient stores who bowsers out the front, a lot of the service stations these days and that's what a lot of people will do, go there to do some shopping as well.

Anthony Frangi: Well, Rob. I was going to ask you because you're in the advertising world. The whole service station persona, the way that the brand has changed today hasn't it?

Rob Hudson: To your point, they are shops with the bowser out the front, that what makes people stop for, I mean the slushy phenomenon with the 7/11, I mean these guys draw in an awful lot of crowds, an awful lot of people buying fuel off the back of other things. Krispy Kreme have done a great job for a lot of the brands. You do shop for other reasons, but I think brutal reality that most people will do it when the little light comes on. You know it’s still most people aren't really planning this as a journey. Those convenient stores are also there to service the local areas on foot or maybe we see people using them as just to shop, people have got lots of parking out the front of the now. But I think in most cases, it’s like a little light comes on, I’ve got a Golf and mine pops up with a little map that says here’s all the petrol stations and which one would you want to go to, you don't even really need to make a decision, it'll drive me to one.

Steve Spalding: One of the problems when you run the tank right down, is you're limited in your options, it almost becomes a desperate fuel purchase, which means if the fuel stations are charging a lot, you have to pay a lot, so if you can top up regularly when the prices are down, overall, you're able to just keep those fuel costs down a bit.

Rob Hudson: Am I right in saying that there's a real danger running a petrol tank down?

Steve Spalding: Yes, there is, there's probably, in two ways, one, sediment and rubbish that's in the fuel tank can end up in the fuel filter and that in itself and requires some servicing work. But more of a risk, is the fuel pump, which can be very expensive it could easily be $500 or $1000 and if you run a fuel pump dry, there's a fair chance that it won't be recoverable and then you'll end up in expensive repair and a tow. You do hear various thing over the few years, and I think the one that's probably, the one that reoccurs from time to time is the fuel additive. So I can put in additive in the tank or whether it be some fuel saving device, it will make a difference and so far we've never seen a device or an additive that works. And I think you've only just got to ask yourself, that if an additive really works, why does the manufacturer not use it as standard.

Nathan Torpey: Since the fuel additive don't really make a difference. Does the type of petrol make a difference? If I'm going on unleaded or premium, is it really a difference between those two?

Steve Spalding: Well, it depends on the vehicle. If vehicle requires premium fuel, which is 95 octane, then you can't drop that down to standard ULP which is 91. Otherwise, you'll introduce engine running problems and possibly damage. You can go the other way but it’s unlikely that you'll get a benefit from buying that more expensive fuel.

Renee Smith: Is there a lot of incorrect advice out there Steve, from whether it's your uncle or mechanic, that may believe in a certain fuel, and people are just confused out there?

Steve Spalding: Look, I think people are confused and are supposed to, with fuel products having their own specialist names, each brand is looking to create a name for that fuel that somehow makes it appear better.

Renee Smith: It’s like you're buying a pizza at 7/11. There's a supreme, there's all these different names.

Steve Spalding: I think we are yet to see, 'Do you want fries with that fuel?'

Anthony Frangi: It’s coming I'm sure.

Steve Spalding: But all fuel is required to make an Australian standard, so that means it’s being prepared and mixed so that it will do a job and it will work in a vehicle reliably. So anything else that's being added to it is an additive by a local retailer where they're trying to differentiate that fuel.

Rob Hudson: Ultimately though, it isn't the way to really save on fuel consumption on a smaller engine? I mean, you've been buying massive V sixes and all these kinds of vehicles that make people still, you know speed in this country, there's this giant engine and vehicles that. Aren't really being stretched to their necessity.

Anthony Frangi: Touchy subject, Rob! People love their cars.

Rob Hudson: We love them but it’s just...

Renee Smith: Steve doesn't have a roaring car.

Anthony Frangi: Let me guess, you drive a Vespa don't you?

Steve Spalding: I have done, they are good!

Steve Spalding: There has been a tendency to downsize engines and I think most of the European vehicles now, are running smaller engines than they were just five year ago. The Australian market though has always had a preference for the larger engine variants and that's why you look at the cars that are brought to the Australian market generally have bigger engines because that what consumers want.

Renee Smith: And has it been growth in there, what was it in the SUV market lately as well?

Steve Spalding: That's been growing for some time now, so I think everyone would know that there is usually an SUV in front, behind, or at the side of them now, whereas, go back ten years and it certainly wasn't the case, but I think people have seen that the SUV is really a good lifestyle vehicle for them. Where initially they did carry high fuel costs and generally high running costs but these days, the fuel-efficient engine is really costing them no more than a normal family sedan.

Nathan Torpey: If you are after fuel efficiency, is it better to after something like a diesel engine? Will that get you more kilometres out of your tank?

Steve Spalding: If you're doing high mileage, clearly, there're benefits in a diesel. So, a diesel will offer a fuel consumption benefits of around 20% or more. I think but there is a premium supply for the diesel engine, so you've got to weigh out, do I spend more on the vehicle and recover them in lower fuel costs or am I better to stick with the petrol engine and pay less upfront. It really depends on how you use the car.

Anthony Frangi: Now, Renee, there's been a lot of talk about real time data, and we've seen this in the southern states. Can you explain what that is and from what I hear its receiving positive news and would it benefit say, Queensland?

Renee Smith: Yeah, it’s really working over the border New South Wales. When we talk about real time fuel pricing data, we are wanting access to the data out there for every service station in Queensland. That would mean we could log on right now, and see what any service station is charging in real time.

Anthony Frangi: Are we going to get it?

Renee Smith: Not unless the Queensland Government gets onboard so we're in discussions with the government but it hasn't come to the table yet. But, in New South Wales the government there has implemented it. It really empowers motorists so they can just check out quickly and easily where the cheapest fuel is, we don't have to drive. No one has free time for that these days. No one wants to be driving around all day to find the cheapest fuel and we think it would be really important to not only empower the motorist, but also it'll bring transparency to the market and hopefully bring prices down as a result.

Nathan Torpey:  We've just entered into an agreement with Puma, we understand that members will get a discount on fuel. What is the take up in like that of people going to Puma stations to get this discount for fuel we now have?

Renee Smith: It has been incredibly popular. The discount deal that RACQ has with Puma, so its four cents a litre off. We encourage motorists to always fill up at the cheapest service station even though that's with or without a discount. We want motorists across Queensland to be getting the best deal and we are having a chat to other retailers about potential discounts that we can offer as well, but we only want to team up with those challenger brands out there because you know bringing down prices for Queensland motorists is really, really important for us.

Anthony Frangi: Thank you for that, Renee. Now, Rob, I just want to talk to you about buying a car. Am I a typical sort of customer, I know what I want but at the same time, I'm not sure what I want. Therefore I'm going to do some research?

Rob Hudson: Clearly everyone is a little bit different and people buy cars for different reasons. I think that the reason for buying is often part of it. Some people buy for life stage, I've got the kids, going to get rid of the sport car. Or get rid of the kids, going to get a sports car. We all change vehicle for different reasons. Some come into money and they want to upgrade; some people need the money and want to downgrade. So, I think the initial reason for changing your car is quite a personal one, in respects to where they can be bucketed.

Rob Hudson: I think the experience you're going through about that kind of like, some people really love the research and they often walk into a dealership knowing far more than the actual dealers do about the vehicle to a degree. Most of us probably walk in feeling quite empowered these days, we've done the research, we bought our copy of what car, we read the little grids, we've kind of got the details, we kind know the features we want. Truth be known, most of us forget a good chunk of that when it gets down to the conversation with the sales guy. We get in the vehicle...

Anthony Frangi: Cause we look at the shiny leather.

Rob Hudson: ... Truthfully, we say, when people buy a car, they still buy it, there's a real guttural emotion, that when you get in a vehicle, do you like the car? And that's really hard for some people who explain to me, car manufacturers spend an awful lot of time designing the face of a car, you know the headlight grill scenario because we know it’s an emotional connection to the vehicle. The hunch is on more expensive cars that supposedly make it look like it sat on the road a bit harder. Those things are not really logical, why do you need to flare wheel arches, you don't really do you?

Rob Hudson: So most of us supposed to get in a vehicle and then kind of feel a kind of an emotional sense of it and we know that goes up considerably if you take it for a test drive and then if you take it four times more likely if you take it for a test drive, and eight times more likely if you have it in, what we call in life, so that whether it's a 24 hour test drive or a weekend test drive...

Anthony Frangi: Eight times more likely to buy the car if they take it home for the weekend?

Rob Hudson: Yeah, absolutely part of that is that you don't do that unless you're semi-committed already and kind of got it down to a short list so that clearly fits in. But, we still hear stories people bringing cars back because they don't fit in the garage, so there's still those moments in time where its actually beneficial for the brand to actually let you do that. I think we will buy off of that but the kind of, what's interesting after when you actually talk to people after they've bought a car, as to why, and they don't really know the features they've bought, they knew about the airbags, they know they've wanted some kind of active safety system, or whatever it is but the vehicle they've actually walked away with, they're not totally convinced that they've got all those things, they're not totally sure.

Nathan Torpey: So why did they buy it then?

Rob Hudson: It's still emotional, most people still buy heavily around emotions, so like the colour still matters. I mean we kind of are above that, and of course I've done my research but the colour, the look, the smell...

Nathan Torpey: I can attest to the colour. We were looking at a Veloster for my partner and we were set on buying a red one and then she saw a yellow one online, so we ended up buying the car from Sydney, that was yellow and getting shipped to Brisbane instead of buying the one at the dealership, just cause she had to have a yellow car.

Steve Spalding: A yellow car?

Rob Hudson: Is it a Ferrari? You can say it's a Ferrari.

Nathan Torpey: I wish it was a Ferrari.

Steve Spalding: The car makers said to me, in the past, that it's from a preparation environmental point of view, it's a tough colour for them. So I've never looked further into that but, you don't see many yellow cars around.

Anthony Frangi: Well there you have it Nathan. Your partner has a rare coloured car.

Anthony Frangi: How much does advertising influence customers today?

Rob Hudson: Cars are really interesting statement of self. If you think about, when you drive car the badge if in the front of the car you have, it says something about you. It is the brand of a car. So, that comes through clearly when we advertise vehicles, we tend to put them into categories. So this is a young trendy car, this is a businessman's car, this is a tradies ute. You put them in those buckets and then you say something about that vehicle. We finish with the price usually or sale or retail offer, ultimately, that vehicle, says something about you they usually got like lively music, or something that makes you feel emotional about them and that's because that's kind of how we feel about a car when we get in that car and get on the road. That's a statement about us.

Renee Smith: Technology I think, is changing so much these days too. That a car my current car is five years old and I just think of the technology changes is in that time and it makes me want to get a new car to get all the bells and whistles that you can get these days.

Rob Hudson: And those bells and whistles differ, again back to the life stage, when you have children all of a sudden you want active and passive safety systems, you start to look at SUV cause you've got to fill the backup, not with the golf clubs this time but with two prams and bags and bags of stuff that kids seem to come with. So all of a sudden there are lots of different motivations for changing that car. I think that when you get into that 10 years, you probably find, in that time you probably haven't had a big life stage change and you aren't kind of happy with it, mid-life crisis may be on its way...

Renee Smith: The sports car is coming!

Anthony Frangi: No, I've actually had the sport car. I've gone through the crisis. Its fine! Been there, done that.

Steve Spalding: There is also a point though where a car ages and then you start to spend more on those repairs and maintenance so I think it is about balancing how long you can keep that car for and get the best value from the car, and at what point you start to throw more and more money at repairs and whether that is the time to sell it then, then get into something new that is unbearably safer, got more features, will be better on fuel and then you start again that initial period.

Rob Hudson: Its interesting as a country, we don't have that natural moment in time, because obviously, if you look at other countries where they have things like MOTs or roadworthy certificates, that a brand new car doesn't require until three years or four years. That becomes a natural moment where people move their car on because it feels like, 'Oh, now I got to get my car checked every year' or 'Now I got to do longer servicing', we don't have that here, so we don't have natural moment in ownership where we go, 'Oh, it's reached its kind of not a new car' moment. Manufacturers are really good at changing, dashboards these days and all this kind of wonderful technology that you can be jealous of. You can literally just look at it and go, 'Kind of want that. Don't need it but I kind of what it.'

Nathan Torpey: So, you know all the tips and tricks behind it, how did you then pick your car? You know what they're trying to get you into and what they're doing.

Rob Hudson: That's a very good question, I went through a retractive process I have to say. Although, I bought a new one last year. I think for me, it was about understanding what, I know I spend more time in a car then standing outside staring at it. So for me, I went for internal features. I have those additional dashboards, and I have a ridiculous stereo system in it, but I also got the leather pack, but I took off the alloy pack cause just to see what the wheels look like. I traded off some of the costs against it. But, also waited for the next car cycle to come through, so I waited for the next model to be launched and then bought the back of the last model. There's lots of tricks of when to buy, not just your own personal drivers, that does come up. But there are times in a financial year in times in the calendar to actually look at when's a good time to walk and have a conversation with the sales guy. Cause at some point you'll have to go through that process.

Anthony Frangi: Let's talk about the best time to buy a car. Nathan, did you take into account when you bought your car the timeframe or a demo model or a run out model?

Nathan Torpey: So, ours was more of a necessity because we had a previous car that was getting quite on the years, and we thought it'd be quite expensive to repair it, so it would be better off to flog that and get something new that was safer and my partner was doing a lot of driving. We went through that stage and then we went to the dealerships, and then it went purely went to emotional impact instead of right time to buy. She fell in love with the Veloster because it was quick, it had three doors, we were going to get one there and then, then she saw a yellow one online, as I said. So, it was as much necessity out of needing to get rid of the old car than emotion and falling in love with this certain type of car and colour that she just couldn't live without after 24 hours.

Anthony Frangi: So, let’s talk about the best time, is there? Is there such a thing?

Rob Hudson: 100 % there is. We kind of use the end of models, so we can pretty much kind of go end of financial year is clearly the big one, everyone knows about that. It's when the big sales come up, and it happens a lot. It's also worth bearing in mind, certain brands that are American cause their financial year isn't in the middle of the year, it's in Christmas. You'll get certain brands that are in their financial year in their business sense and they won't market it and such but, actually comes at Christmas. So, you can get some deals around the last few months of the year as well. That also comes down to the fact that shipping stops and it takes a very long time to get a car into Australia and therefore they usually end up with a little bit of glut of too many products towards the end of the year...

Steve Spalding: So, end of financial, whether it’s Christmas or whether it’s...

Rob Hudson: Yup, end of quarter is always good. They've got to do their financial report, and the same as the rest of us. They want to hit their targets. Mondays are really good because you actually get some proper time with the sales guy. Weekends are usually pretty terrible to be honest, where the guy just wants to move you out the way or wants you to come back, so it’s not good time to try and do a deal. The end of day is not too bad. The end of Monday, come in, go in, you can cut the process down a little bit, none of us really want to sit there with these guys for two or three hours anyway. So, if you go at the end of the day, if he's had a bad day, he's going to try and close the deal off quickly, but he also just wants to go home.

Anthony Frangi: Right, I'm just making a note here. Monday, at 4:55.

Rob Hudson: Give yourself enough time to do the deal.

Anthony Frangi: Monday at 4:45.

Renee Smith: It makes sense, but I would never have probably given too much thought into the time of day that I would go but, that makes sense. I think my car, I bought at the end of the year, so got a good deal or better deal because of the plates. But now I wonder, was that even the best idea because then you got, when you go for resale, the car looks a heap older than what it actually was. Did I really get a good deal?

Rob Hudson: End of model run outs, are clearly another big one to look for.

Steve Spalding: And the dealers will price a car on the older year, and I think that's why when you're buying a car, be very clear. Being clear on your budget, being clear on the spec you want, and importantly learning to say the 'NO' word because it’s very easy to see a price on a car and then by the time all the accessories are added on, you find this another three and half or four thousand dollars that you hadn't planned on that is now on the bottom line on the price of that car.

Renee Smith: A hidden cost that I didn't realise when I bought my car, was with the GPS system in the maps, and the updating of it. To ask to get it updated, was something like seven hundred dollars. So I've never updated my maps in my car in the five years because I can't handover the seven hundred dollars out of principal.

Rob Hudson: I think that's pretty much declined now. I think that most of them realise that it's a horrible pain point for you when you actually get to that point in the service and they go, 'would you like to update your map?'. I think it's definitely declined that, that happens but probably still on some platform, someone still does it.

Nathan Torpey: I never got caught up in that, but the aftermarket upgrades I did because I was a bit of a car enthusiast. With my first car I got leather interior redone afterwards, I put new wheels on it, I had the thing completely repainted, put in a big spoiler, stereo, it was the best-looking Celica you will ever see. And then we were driving to Movie World one day and the engine blew up, and then I was like, 'Ah, well there goes thousands of dollars into that car, so then it was quickly sell  and just buy something like a daily drive, where I don't have all that hassle afterwards.

Renee Smith: I've been told that pain protection and, Steve, correct me if I'm wrong, is an absolute rip-off to get that...

Anthony Frangi: This rust protection as well.

Renee Smith: And they offer you that when you're purchasing the car...

Steve Spalding: So typically, now, it's an accessories pack, it will include, window tints, paint protection, fabric protection, and rust proofing. I think our advice, is always say no.

Rob Hudson: It has to be said, it’s still one of the high-pressure sales moment.

Anthony Frangi: And they really push it.

Rob Hudson: You don't get that conversation until you've signed at the bottom line for the actual vehicle. They've got the sale, they know you're not walking out that showroom anytime soon. So, you watch the dealer principle and your sales guide disappear rapidly and leave you in the room with someone, as you say with some windows tint, and some titanium spray, that's supposed to be magical. My argument is always, if the paint is that bad, why you selling the car? Does it need some extra coat on top to survive? What are you doing?

Steve Spalding: But I think there are some good accessories, I always believe that genuine floor mats make a difference, not only do they need to fit the vehicle well, but they're a safety point so you won't be sliding around and get caught under the pedals, if you carry a lot of stuff in the back, say an SUV, then look into floor protector.

Nathan Torpey: Now Steve, you drive a motorcycle as well, did you enter in a different, thought of mind frame when you went to buy a motorcycle as when you went to buy a car?

Steve Spalding: I think with a motorcycle, as most riders would know, that there's often more of a love around the machine. But I would still take the same approach and that is really it’s about the machine, it’s got to do its job, you spec it right, and then you don't over spend on accessories.

Anthony Frangi: Well panel, thank you for your time today!

Nathan Torpey: Thank you.

Rob Hudson: Thank you, pleasure.

Renee Smith: Thank you.

Anthony Frangi: If you would like more information on any of the stories raised today, go to roadahead@racq.com.au.

Anthony Frangi: I'm Anthony Frangi, join me next time for more RACQ living.