Sponsored blog by Jonny Clayton, CEO of Oodle Car Finance
THERE has been rapid acceleration of car loan growth in the UK over the last few years, with the most recent figures showing that consumers borrowed a record £34.2bn in 2017 to purchase vehicles, with an increase of 12 per cent in used car finance, year on year.
Though dealers have a sizeable share of the new car finance market, the picture is very different in the used car market. It is estimated that dealers have just a £12bn stake of the £58bn used car market and this is coming under increasing pressure, thanks to a major push by online finance providers to capture more consumers early. (*Source: The Finance and Leasing Association 2018.)
With an increase in the number of customers researching and sourcing finance on-line, specialist auto finance brokers like Car Finance 247 and Zuto are experiencing high growth in business. There is also a growth of online lenders and comparison sites such as MoneySuperMarket.com and Confused.com, who are capturing customers earlier in the car buying process.
Recent research shows that one in five car finance holders are arranging their finance online*, with 16 per cent using comparison sites and nine per cent using specialist car finance websites (*Source: Mintel 2017). This inevitable growth will continue to take share away from dealers, with customers turning up to the dealer to buy a car with their finance already arranged.
The customer journey is also changing. Many car buyers are securing finance, matched with a vehicle of their choice on a single website – without touching a dealership, until vehicle pick up. This will naturally direct car sales and valuable income earned from arranging finance away from dealers that are not integrating into these on-line offerings.
The move online and the ‘iPhoneification’ of the industry is changing consumer buying habits and attitudes to car ownership. Digitally-savvy consumers, many of whom are used to one-click processes in almost every other industry, want transparency and efficiency, executed within a modern retail environment.
A more seamless purchasing experience is being brought to market and new technologies are allowing businesses to play a more proactive role in consumer journeys, before, during and after they have left the forecourt.
So how can dealers protect and grow their share of the used car finance market? Dealers, working alongside progressive finance companies and software providers like Click Dealer, have a great opportunity to compete.
They need to partner with companies that are focusing on providing a seamless, straight through. online financed car purchase – integrating this into the dealer’s own website and advertising channels, or via the finance company’s own online marketing and customer acquisition channels.
This will drive sales to the dealers.
It’s all about having the right digital tools in place to provide amazing customer journeys and experience.
The finance process is a huge obstacle to build this slick experience.
But these can be improved by partnering with a progressive technology-led, finance provider.
A modern, fast, tech-informed lender can support dealers to create a great customer experiences, taking the customer directly through the application and onboarding process, fully online.
This online process has the added benefit of improving sales conversion rates, as customers can come to the dealer in the morning with the car purchased, finance secured and appointment booked.
The importance of dealers finding new and efficient channels to acquire customers is greater than ever, along with engineering ways to retain them.
At Oodle Car Finance, we are continuing to develop our offering to help dealer partners, by building our own customer origination channels to support sales growth in dealers; rolling out customer retention strategies to get existing customers back into dealers on new sales; and having a strong focus on delivering to both dealers and customers, a retail experience equivalent to Amazon’s 1-Click. That’s the future we are trying to support.