The age of mobility is getting closer
It seems like you can’t go to a conference these days without hearing at least one of a few things.
Lots of millennials are more interested in being able to access and use an item than physically own it, that customers are increasingly connected via their mobile devices, and are using these devices to do more and more of their shopping and research, and that, as a result of all of this, we’re seeing new business models emerge.
One thing that sometimes dips a bit under the radar is that PCP is often described as a usage product (as people may just hand the car back at the end of the term) and that PCH is growing its market share – despite a number of major lenders still not offering it.
Looked at in this way, it’s perhaps unsurprising that a product like EvoGo can grow fairly rapidly, with relatively little money spent on advertising.
The question is whether this will impact traditional car finance, and if so, to what extent, and how?
While complimenting the FCA may make me unpopular to some, the work everyone in motor finance has had to go through to ensure they put the customer at the heart of what they do will no doubt ensure traditional motor finance players are as well placed as possible for whatever challenges may occur.
There are a few areas people have been quite open to me about concerning how the industry needs to improve. For one thing, it needs to get better at actually letting customers access the finance. Again, you don’t need to look far to see people saying things like “customers don’t want to have to go to the dealership, choose their car, apply for finance, then go home to collect documents, fax those documents, and so on” and there is a reason for that. The majority of customers these days will have researched online, and there’s a not insubstantial chance they are coming to a dealer with a view to picking up and paying for the vehicle there and then. Anecdotally, I know people who’ve done this without even taking a test drive. The aim then is to make it as easy as possible for customers to finance that car on that first, and potentially last, visit.
On the other hand, with new car sharing clubs emerging in inner city locations, there may be a decline in private sales, which none of us can do anything about, which would inevitably means less business for POS consumer car finance. Will these inevitably be a threat to traditional players? In the long run, maybe. In its current guise, however, it’s still probably a bit too centred on urban dwellers, and there are still too many cases where the convenience of owning a car massively outweighs any advantage car clubs currently have.
Whether this will change in future, and if so, to what extent, only time will tell.