Motor Finance, Customers are changing – are you ready?
We recently hosted an international conference exploring the future of motor finance.
Despite collecting speakers from companies based as far apart as Ireland, Spain and Cyprus, with fleet providers, fintechs, consumer lenders and more all having representatives present their views, a clear theme emerged from the day: customers standards have changed and are continuing to change, driven by an ongoing rise in connected mobile computing. As a result you need to change with them.
While this might sound a bit doom and gloom, the overall message from the day was positive. The fact that a conference filled with the heads of some of the biggest companies in motor finance featured so many people talking around this theme proves that, as an industry, motor finance isn’t sleepwalking into a disaster, drunk on the successes of PCP.
And there were some great examples of companies looking at how to keep motor finance up to speed with recent technological developments. Volkswagen Bank in Germany has launched its Leasingbörse platform, where users can look online for used VWs, while BMW launched a new webstore in the UK at the end of 2015, including a finance calculator. While the products are necessarily different in the independent space, a number of lenders and brokers have brought out products which are aimed at helping dealers improve their online finance offerings.
This is only part of the battle, however. The speed of growth of Uber at the expense of traditional taxi companies, shows just how quickly an online start-up can totally revolutionise an industry that was previously thought of as working fine. Topics such as ‘the internet of things’ and autonomous cars are only in their infancy and, as these continue to grow, no doubt new business models will rise. It will be important for companies to keep tabs on as many developments as possible.
Two specific themes businesses need to consider which were spoken about at length at the conference were the rise of usership, and the rise of mobility as a concept. It’s no secret these days that lots of people are moving towards usage models (Spotify and Netflix) over ownership (having CDs and DVDs). For cars, PCP is a step in that direction compared to outright purchase, with PCH a step even further in the direction of usership. Recent years have seen PCP really start to take off in the used car space, so the questions I’m curious to see answered are: will PCP continue to eat up used car finance market share, going into older cars and less prime deals? And will PCH really begin to take off in the near future?
On a similar note, we’re starting to see a real rise in various car sharing options. In many ways this is an exciting time. This is an industry change without real precedent, and one that’s changing rapidly. As a result we’re seeing new business models and products cropping up all over the world. At the Motor Finance Conference, we had one of the founders of Madrid-based car sharing club Respiro speak about how his company is looking to capitalise on these changes. In America, Ford Credit launched a group leasing pilot (whereby groups of people can jointly lease a car), while from my office in London I can see a number of Zipcars parked in the street most days.
What types of car sharing, if any, end up catching the imagination of the mainstream public is something nobody knows 100%. This is a developing field where what is new and shiny today, might become obsolete tomorrow.