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2020 has been a year for reinvention, agility, compassion and a ‘can-do' ethos that is seeing motor retailing reinvent itself. I’m immensely proud of the role that MotoNovo has played in a year like no other as we stood and continue to stand side-by-side with our dealers and customers.

As we come to the close of what has been an unprecedented year, I find myself looking forward to time with family at Christmas and looking forward to the year ahead. I’m sure I’m not alone in feeling a combined sense of apprehension and optimism for 2021.

While writing this, I looked back at Karl’s review of 2019 and our outlook for 2020, we could never have predicted the sizeable events of this year, but many things haven’t changed.

The review was led by the FCA changes expected for motor finance and the launch of the Senior Manager Certification Regime (SMCR). My immediate thought is little has changed because both are such dominant items today with new deadlines for both looming. However, this doesn’t dominate my thinking looking back at 2020.

Crucially for dealers, we kept lending during lockdown with no changes to our credit approach. We kept our foot to the floor in terms of innovations in new stocking models designed to help dealer cash flow, new technology to help consumers access and manage their accounts and most notably in the launch of the ground-breaking MotoRate pricing model. We continue to provide a support hub for dealers, giving them the tools and resources to move forward in the current climate.

Over 2,000 dealers have now embraced MotoRate and the January 28th FCA deadline is fast approaching. I know other models are being offered, but I was struck by the words of two competitors on a recent webinar suggesting that they both expect risk-based pricing to be the future for dealer finance. The critical barrier in the short-term being the time needed to develop the pricing technology and functionality.

Before moving on from MotoRate, my personal thanks to the dealer community who are helping us shape the business model, placing their trust in us for the future of dealer finance. I appreciate your support and I’m delighted that the year-on-year growth is delivering a win for you, your customers and MotoNovo - thank you.

Last year, we noted “Into 2020, dealers will need to be leaner and more digitally engaged.” It was a call to action made because the risk from potential disruptors was gaining momentum. As it turns out, becoming leaner and embracing digital capabilities were an essential part of surviving 2020 in the face of the pandemic.

While the backdrop to the ‘why’ the industry changed was clearly distressing, the outcome has to be welcomed. Click and collect, distance selling and the use of a series of online tools to meet customer needs will serve the industry well as we go forward, turning ‘survive to thrive’.

In 2020, the value of service and care became clear; price is not everything. Transparency, care, expertise and quality can come together to help create a brighter future for an omnichannel car dealer model.

Being lean remains vital, as will agility and continuing to embrace digital channels, but in 2021, if we can focus on delivering the ‘wow’ factor for every car buyer and prospect, shaking off old practices and welcoming in the new, we can create a new level of value and trust and with it, raving fans who keep coming back and who keep delivering new referrals. It’s a prize worth pursuing.

I hope everyone enjoys the festive season and has a very Happy New Year!

Jon Slater, Chief Marketing and Strategy Officer


2020 has been a year for reinvention, agility, compassion and a ‘can-do' ethos that is seeing motor retailing reinvent itself. Chief Marketing and Strategy Officer, Jon Slater, looks back at the past year and what lies ahead in 2021...

2020: a year in review

2020 is sure to be a year that will go down in history, but there’s a lot that we can learn from it too.

Recovery and the need for reinvention go hand in hand. It’s also clear that changes in the way we live and work will become part of a new normal. We might be starting to see the light with the vaccination programme rolling out, but it’s evident that the impact of the pandemic will last long into the future.

We’ve identified three key areas that might just change the business world forever:

Digitisation – in every sector, businesses that were further down the digital road were less disrupted by the pandemic and able to adapt more swiftly. Those that were a little further behind have quickly had to adapt their processes to meet the new consumer expectation

Sociocultural change - supported by regulation, we’re seeing a growing focus on care, values, ethics, transparency, fairness and the environment. These impact businesses in all the right ways, focusing on the way they care for their staff and customers.

Collaboration – close collaboration allows for increased speed and capabilities, a broader reach and even new insights. A spirit of togetherness born in the pandemic can bring long-term mutually beneficial relationships

In motor retailing and financing, as we look to recover, we must also look to reinvent. At MotoNovo, we aim to keep collaborating and innovating. Here are our top 5 ways to do just that:

Optimise your digital capabilities
 Digitising a dealer business is not just about online marketing; it is about using technology to get closer to customers, take cost and time out of operating processes and add new levels of convenience for customers. It’s time to start looking for tools that could help you to be more efficient and effective in every part of your business.

Put customers first
 Treating customers fairly should not be viewed as an FCA requirement; it’s clear business sense. In an online world, when it comes to the customer experience, it is critical to recognise that potential customers are only ever a mouse click away from a competitor. 

Invest in your teams
 you can never have enough good people, but do their roles need to evolve? Look after your staff and get better at serving your customers in the new normal. Developing new skills for some will be crucial, especially as digital technology comes to the forefront.

Stay curious
 Your business model shouldn’t be stagnant, you’ll need to move and adapt with the changing landscape in 2021. That might mean refining your stocking process to cut costs, adapting your marketing or refining your income model. Keep asking questions and challenging your business. 

Be fresh and relevant
 New thoughts, ideas, tools, the layout of your website the frequency and quality of communication can all be kept fresh. In many ways, it is the digital equivalent of updating the forecourt and keeping the stock fresh and shiny.

If you want to learn more about optimising, maximising and digitising your dealership, visit our Supercharge 2021 page! 

Head to our recovery and reinvention hub for more resources.

2020 will certainly be a year that we don't forget, but there's also a lot that can be learnt from it too. We've identified key areas that might just changed the business world forever.

5 ways to reinvent your dealership

I have given my outlook a bold title consciously accepting that there will be plenty of challenges ahead. I’m firmly of the belief that embracing change positively is the critical factor that can help businesses to progress and thrive and this is especially true against a challenging backdrop. In over twenty-one years at the helm of what today is MotoNovo Finance, the value of a positive and bold approach to change has always seen our business come out of difficult times stronger.

As we look to 2021, I wanted to share my thoughts on Recovery & Reinvention.

The events of 2020 have reinforced my belief in the critical nature of our team to our success. As we look ahead, the continuing reliance, engagement, energy and agility of the teams in every organisation have never been more important, given the pandemic and the uncertainty surrounding Brexit. Business leaders, who are reliant on their teams, have a crucial role in inspiring belief in a vision for the future (that will inevitably involve a period of accelerated change) and demonstrate a genuine interest in the well-being of the people that they are privileged to lead. 

Success in trying times is not blind luck; it is a combination of a positive ‘can do’ approach, a business culture that commits to this ethos and above all, a great team. As a small aside, it is not an approach modelled for tough times; sustained success is about being ‘on parade’ all of the time.

To illustrate this ‘always on parade’ principle in context, in 2018, we started working on a new risk-based pricing model. A great deal of work, investment and support from pilot dealers saw the result, our new MotoRate pricing model launched just as the initial lockdown period ended.

The launch of MotoRate was perfectly timed to help dealers adapt to the changes and ban in discretionary commission required by January 28th. It also proved to be ideal in helping consumers who were facing a tighter personal loan market that saw a 59% reduction in personal loans during lockdown (April to June 2020) compared to the first three months of 2020. Dealers saw their finance activity grow and so did we – my thanks to all our dealers.

Making small gains continuously is crucial to success. While Recovery is very much about the here and now, Reinvention should be viewed as a constant theme. Avoiding unnecessary costs is one way to improve, but seeking out improvements and value adding is just as important; as an example, increasing digital activity and engagement offers a highly cost effective opportunity.

Stop looking for suppliers, start looking for collaborators who can add value to your business in a long-term arrangement with their skills and capabilities. It is a situation where the value a good collaborator can offer, exceeds price.

Building on the previous point, it is important to challenge cost v value wherever you can.

The SMMT is forecasting a 20% increase in new car registration and around two-thirds of dealers expect used car sales in increase in 2021 with around a third expecting used car values to rise. All of these look realistic, with a positive used car outlook representing a trend we have seen consistently in more challenging market conditions and new cars set to show recovery from a difficult 2020. 

The most immediate development will be in financial services. By January 28th all dealers must have changed their approach to finance to meet the new Financial Conduct Authority (FCA) regulations.

Please do not take this lightly, the changes are significant and represent a significant opportunity for many dealers to enhance their business. With MotoRate, we have seen volumes from dealers increase significantly; we expect this trend to continue in 2021.

I’m a positive person but also a pragmatist. The importance of the operating environment is critical. So, a few observations:

I hope that in some small way these thoughts provide some ideas, but if there is one single item I recommend you focus upon, it came near the start of this review; sustained success is about being ‘on parade’ all of the time. My very best wishes for 2021.

In a year that provided a challenging backdrop, CEO Mark Standish, believes embracing change positively is the critical factor that can help businesses to progress and thrive. As we look to 2021, Mark shares his thoughts on Recovery and Reinvention...

Recovery & Reinvention - looking to 2021

Hire Purchase - "Rates are often higher than standard car loans" 

                                                                                - MoneySavingExpert.com November 30th 2020.

This advice and the guidance also on the MSE site that notes; “Unless you can get 0% finance from the dealer, personal loan rates tend to be cheaper than dealer finance” crystallises the challenge facing used car finance. In an increasingly online personal finance world, informed and empowered customers are in control and trusted guidance is steering them away from dealer finance. It’s time for a 360o turn; meeting the Financial Conduct Authority (FCA) January 28th deadline for change is the opportunity.

Chief Risk Officer, Stephan Bothma is urging dealers to prioritise their approach to the forthcoming changes and make a positive decision, noting;

“As a risk professional, I recognise the risks of change, but above this, I recognise the risk of not embracing change positively. The dealer model is not immune to the current High Street issues. If we don’t take care of our customers, someone else will. Dealers need to invest in their relevance to today’s car buyers. Perceptions of used car dealer finance need to change.”

Pricing model options & customer outcomes

The FCA’s Policy Statement on motor finance referenced the ban of discretionary models and two potential pricing options; risk-based pricing and flat-fee models. To these, the market is now also starting to see some signs of a fixed rate and fixed commission model. Fixed-rate finance is easy and compliant in principle, but it risks falling short of changing the dynamic for car buyers.

Ensuring, ‘that consumers get a fair deal’ is top of the FCA’s objectives in demanding change in dealer finance. Stephan has a clear view of what this means;

“A fair deal could be seen as subjective, but when aligned to the FCA’s call to; ‘reduce financing costs for consumers’, I think we all have a clear idea of the regulator’s intent. For me, it means offering a fair interest rate, appropriate to the applicant’s circumstances. Risk-based pricing delivers this and is behind most unsecured personal loan models. 

“Fixed-rate finance is a blunt one-size-fits-all pricing model that does not work for the most creditworthy and can impact the broader loan book portfolio quality negatively, which, is bad for the reputation of dealer finance. It creates the self-fulfilling prophecy highlighted by MSE; Rates are often higher than standard car loans. As a result, all too often, customers seek their finance elsewhere, especially those with a better credit profile. It feels like an own-goal.”

The experience of over two thousand car dealers is that a risk-based pricing model that invests in the customer’s experience with a personalised approach that creates the fair deal sought by the regulator is elegantly effective. Dealers are growing their used car finance sales and they report it is helping their reputation. Stephan concludes;

“The prize of positive change in finance is evident already; it is helping to turn the tide in the way people finance their used cars and helping to make the dealer model relevant and valued. Some may see the move as brave, I see it as crucial to the sector’s future.”

Recently, trusted guidance is steering customers away from dealer finance. It's time to flip the switch by meeting the FCA's 2021 deadline. Chief Risk Officer, Stephan Bothma is urging dealers to make a positive change ready for the new year...
 

FCA Changes - If we don't take care of our customers, someone else will

Taking time, cost and friction out of used car stocking through auctions is the aim that has been achieved by our new Supplier Direct Funding approach. As one of the UK’s largest suppliers of used vehicle stock funding, a significant number of dealers stand to benefit.

Commenting on our latest innovation, Chris Rowthorn, Head of Operations New Business notes:

“The capacity to buy, prepare and retail used cars quickly is the critical skill that dictates success for any used car dealer. Anything that can add value/remove cost to the process will be of interest to dealers. Even modest improvements can quickly make a difference. An improvement in the stock purchasing/funding process is precisely what Supplier Direct Funding has achieved.”

For many dealers, auction houses have been a mainstay of their stocking approach. Whether dealers purchase stock digitally, by telephone or in-person, Supplier Direct Funding can now make a positive impact for the dealer community.

Collaborating with long-term wholesale funding software partners APAK, we've pivoted the traditional funding process. Instead of dealers paying the auction house for stock and then adding each vehicle to their stocking plan to seek funding from us, the auction house loads the vehicle to the dealer’s plan and we pay the Auction house directly.

The elegantly simple fully automated digital shift changes everything delivering a repeatable benefit that takes time, cost and friction out of the historic auction house purchasing/stock funding model.

Cashflow – the flow of funds is accelerated; having been notified by the dealer that Supplier Direct Funding is their method of payment; the auction house invoices us for 100% of funds, plus their auction costs and provides full vehicle details. Digital authorisation sees the auction house paid electronically by return. On Day 1 an agreed purchase price reimbursement percentage (typically 20-30%), plus auction costs are debited from the dealer. Currently, MotoNovo reclaims VAT from dealers alongside their auction costs, but a move to start funding the VAT element is imminent.

Time – with stock details now added automatically to the dealer’s stock funding plan, the need to manually upload vehicle details and ‘pay & reclaim’ is removed

Convenience – automatic stock loading lightens the audit requirements and streamlines the process considerably.

The new service is live with Aston Barclay and Manheim auctions, with discussions ongoing with other auction providers.

In closing, Chris reflects; “In an environment where time is money, Supplier Direct Funding builds upon our highly competitive stock funding model for dealers, offering them repeatable savings on time and therefore money. From the pilot work and dealer feedback, we know the new service is having a positive impact for dealers and is yet another example of our dedication to the dealer community in what remains a challenging environment.”

Press release issued by MotoNovo Finance, December 2020


In a move to make a positive impact on the dealer community, we’ve launched our new Supplier Direct Funding approach taking time, cost and friction out of used car stocking through auctions.


News - December 2020

2020: a year in review

5 ways to reinvent your dealership

Recovery & Reinvention - looking to 2021

FCA Changes - If we don't take care of our customers, someone else will

'Supplier Direct Funding' stock funding innovation launched

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