11:03 am, March 15, 2022
Used car buyers are starting to return to more pre-pandemic purchasing trends, while used vans are still flying off forecourts.
That’s the word from Close Brothers Motor Finance. The firm’s managing director, Seán Kemple, appeared on Car Dealer Live to explain Close Brothers’ trailblazing new partnership with Auto Trader, and also revealed the current activity in the new and used car finance markets.
Kemple described how much of the erratic purchasing behaviour seen for the past two years in the used car market had started to stabilise, while in the LCVs sector the opposite is true.
Dealers experienced a rush of customers wanting to finance and purchase practical – and often cheaper – second-hand cars to avoid using public transport, and a rise in interest in expensive and exotic cars as some buyers wanted to treat themselves.
‘Those trends aren’t as prominent as they were when the country was coming out of each lockdown,’ said Kemple.
‘People couldn’t go away on holidays so they were treating themselves with a different vehicle, so we were seeing our average advance increase quite significantly.
‘That increase was reflective of the higher-quality used cars people were purchasing and also the used car price index increasing.
‘We’re seeing that plateau now with our average advance staying at a stable amount over the past few months.
‘That would mean consumers are looking at more consistency and perhaps moving into used because they can’t get a new vehicle.’
Kemple added: ‘It’s still higher than average advances and higher than pre-pandemic, but not the fluctuations we saw after each lockdown.’
It’s a completely reversed situation when it comes to financing used LCVs, he said.
Kemple explained the market was still experiencing ‘huge demand’ for used vans as people continue to buy goods online and are on ‘first name terms’ with delivery drivers.
‘From a light commercial vehicle perspective, we saw those numbers absolutely rocket during the lockdowns.
‘We are still seeing demand there, which is really great for the economy,’ he said.
Kemple also shared his hopes that the total UK used car sales could top eight million in 2022, a prediction based off a strong January and February for finance business.
However, March has been slower due to a rise in utility bills, a general increase in the cost of living and the ever-worsening situation in Ukraine.
Knowledge is power
Kemple was speaking on Car Dealer Live as Close Brothers pushes its revolutionary new partnership with Auto Trader.
Close Brothers’ dealer partners are now able to use a clever new tool, powered by Auto Trader data, that gives them a better understanding of regional trends, stock inefficiencies and consumer behaviour.
Close Brothers believes the powerful insight tool gives dealers the ability to unlock their full potential when it comes to buying and selling stock.
‘We fund a large number of dealers’ forecourts, so we can see the stock on dealer forecourts,’ explained Kemple.
‘We take Auto Trader’s market-leading data and speak to the dealer to aid the sale of those vehicles –what demand is in the marketplace and how those vehicles should be priced depending on their strategy to either move the vehicles as quickly as possible to release profit, or maximise profit over a longer period of time.
‘That’s just one part of it – the other is also what consumer demand we’re seeing coming through our partner classified sites like Auto Trader. These tell us what’s about to hit the forecourt.’
Kemple added it’s never been more important for dealers to have crucial data at their fingertips.
‘If you cast your mind back to 12 to 18 months ago, we were seeing a lot of dealers saying: “I’m not going to pay those prices because I’m afraid of retailing at the prices I’m going to be purchasing at”.
‘Having the data to understand what consumers are willing to pay, what price points they’re searching for, allows us to work with a number of those dealers to help them.
‘At one point we were seeing dealers at 50 per cent of their forecourts because they were too concerned to buy the stock at the prices that we’re selling at wholesale.’
The insight tool is a ‘value-added service’ to Close Brothers’ dealer partners, said Kemple, and delivered through the firm’s account managers who turn the data into actions specific to the dealer’s business goals.
Kemple also explained how unique the new insight tool was in the market.
‘I can be confident to say that nobody else is working at this depth,’ he said.
‘This is really unique in terms of the joint venture with Auto Trader – to bring that data in and start working with the dealer partner.
‘It’s not just catching up in the market or being competitive, it’s market-defining.
‘We’re seeing some great success stories – dealers increasing prices on vehicles based on demand that goes against everything in a dealer’s DNA.’
There’s more to come, added Kemple.
‘We’re currently working on something for the motorbike sector – that will be an industry-first, as nobody is really providing live data into the motorcycle dealer.
‘We also want to focus in on the LCV market.’
Click the video at the top of this story to find out much more about Close Brothers’ partnership with Auto Trader and its insight tool, and Kemple’s views on what we can expect from the new and used car market in 2022 and beyond, or click here
