The bounce back in used car sales since the first lockdown measures were lifted has been helped by dealer finance as consumers encountered restrictions by other lenders.
Customer interest has been increasingly turned into action, and dealers need to recognise that the positive approach to dealer finance to enable sales that has been seen in recent weeks can pay long-term dividends.
In late September, Moneyfacts reported that ‘since April, getting accepted for a personal loan has become significantly harder’, but at Mann Island, we have written record volumes of finance, primarily in the used vehicle sector, since June.
There has been a healthy trend by dealers to use finance as a marketing and closing tool, with competitive rates being offered. The net result has been a significant increase in used car finance volumes.
The message of finance availability and competitive pricing can represent an essential building block to the future used car retailing model.
It’s a move helped by a healthy increase in chassis prices driven by high buyer demand and limited supply.
Higher prices for cars have broadly been offset in monthly cost terms for consumers by the lower APRs dealers have typically been using in their promotional activity.
As a result, finance penetration has been rising, with dealers earning a little from a broader pool of customers.
It is an approach that works for all parties in the short and long term as we approach Financial Conduct Authority changes for motor finance.
On January 28, a new regime for finance pricing and a more stringent regime of commission disclosure will commence.
The trends we have seen over recent weeks provide a positive illustration of how the post-January 28 car retail landscape could look.
I, for one, am positive that the message of finance availability as well as competitive, transparent car and finance pricing, along with fair treatment, can serve the sector well.
This will increase customer trust, enhancing retention with lower acquisition costs and establishing a lasting role for finance as a profit centre.