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On March 23rd last year, the Prime Minister announced the UK's first lockdown and it came into force three days later.

Over the last year, we're proud to have stood side-by-side with our dealers and customers, supporting them against what we all know have been unprecedented circumstances;

54,695 customers have been helped with tailored payment deferrals

Over 2,000 dealers have been supported with financial assistance with stock funding plans, no fee click & reserve tools 

Some of this support remains in place as we work with dealers and customers alike.

As CEO Mark Standish reflects, these highlights were only part of our COVID support programme, noting;

“Financial support to our dealers and customers has been critical for many, but I am also proud of the way our entire team stepped up our proactive communication and innovation activities. Signposting dealers to the continually updated support options made across the UK, developing online tools and guidance to help many make a rapid transition to online retailing are just some of the steps we have made. At the same time, we helped over two thousand dealers transition to meet the new FCA rules successfully with our ground-breaking MotoRate risk-based pricing model.”

“Throughout the last year, our dealers and customers have seen the value of collaborating with a fully committed partner. It is something they will see more of as we start on the road to recovery when showroom doors open in a few short weeks.”

Press release issued by MotoNovo Finance, March 2021 

A year on from the first national lockdown, CEO Mark Standish reflects on how we've stood side-by-side with our customers and dealer partners. 

An unprecedented year for dealer and customer support

In a three-minute read, I am to outline why an extended used car warranty as part of your marketing can add real value to a dealer’s business and I’m going to back that with academic insight.

I hope it provides you with some fresh food for thought!

When it comes to buying a used car, reliability is a crucial feature. According to a new What Car? Motoring Panel survey, nearly two-thirds of car buyers rank reliability as the most important quality when buying a new or used car. 

In their pre-purchase car buying journey, car buyers can access reliability survey information and data when assessing a car, but some want that extra reassurance in a good warranty. It has led to OEMs offering ever-longer extended warranties and featuring them in their marketing prominently. When a used car dealer is promoting their cars, they are, in essence, marketing both their stock and themselves. Car buyers want both to be reliable. A quality used car warranty can help to demonstrate both are to be trusted.

As a hard data point, 32% of car buyers look for a good warranty as part of their purchase journey. It is a sizeable number proportion, but I believe there is more to be considered in supporting the value that an increased focus on the extended warranty can create;

A long-term used car warranty is a massive statement of confidence by a dealer;

In uncertain economic times, a good warranty provides invaluable reassurance;

It moves the whole dialogue away from price and towards quality service;

It can enhance a dealer’s reputation and retention.

Not all warranties are the same and some are, in essence, underwritten by dealers. There is nothing wrong with a dealer warranty, but I believe dealers need to be ready to provide a non-dealer option for the increasing number of distance buyers, reassurance for the buyers, potential hassle avoided for the dealer.

The academic view of extended warranties 

Yes, there is an academic on this very subject; ‘The Importance of Warranties Marketing Essay’ 14 pages condensing a series of academic studies and wisdom. As a heads-up, it is not restricted to the motor industry, but I believe some of these verbatim extracts make for interesting reading;

Consumers consider warranty as signals of product quality because they know that offering warranties are expensive for firms. Longer warranties build consumers’ utility and increase the likelihood of the product being chosen. Choi ( 2006)

Boulding and Kirmani (1993) the warranty can, in effect, serve as a telling signal of the qualities of products.

Warranty and product quality can be thought of as consistent with the use of warranty as a basis of judging the quality of a product when consumer moral hazard is present.

When products are sold with warranties, a linkage is created between buyer and seller. Because the seller’s future profitability is dependent upon the behaviour of future consumers. Bigelow, Cooper, & Ross(1993)

Some of the language is inevitably academic, but I hope the sentiment is clear; warranties enhance buyer confidence and enhance the seller’s reputations and customer retention.

Select a good extended warranty, checking its scope from the outset;

Ensure the car on offer is covered by the warranty T&Cs

Ensure the scope is always very clearly explained to the car buyer, don’t just give them a handover pack; those T&Cs can cause problems later on if people think wear and tear is covered for example;

If you offer your own warranty, consider adding a third party option for those distance sales;

Make a long-term warranty an integral part of your marketing – long-term is at least one year and do so in words and images.

Two-thirds of car buyers rank reliability as the most important quality when buying a used car. Southern Zone Sales Director of the AutoProtect Group, Joff Suter, believes this could be a key marketing tactic for your dealership. Take a look how...


The value of warranties as a marketing tool

The re-opening of dealer showrooms is coming and dealers must use the time available now to get ready. The last year has, for many, been led by the need for survival, we should now look to how best to evolve and thrive.  

At the core of change have been the way people buy and the dramatic shift to an online retailing world. I share the view that many people will still want to visit a showroom. The Motoring Ombudsman has just published data on this – 62% of people still want to visit a dealer when buying a used car to check over the car and take a test drive.

Encouraging and welcome though this is, it still means that over a third of people don’t see a reason to visit a showroom. It is a significant number. Even those who do come can be expected to arrive well informed on the car, finance and the dealer, having completed their groundwork online.

The future is not just about marketing the cars on offer; it is about establishing dealers as a trusted destination online and in-person.

Hand-in-hand with digital tools, the future will increasingly be directed by the quality of marketing. Online and in the showroom, marketing the experience as well as the car matters. Unlike a car, a fantastic experience is hard to replicate and represents a valuable differentiator that must be brought to life digitally.

As a guide, I recommend looking to a classic marketing tool – ‘the 7 Ps’. The model originated with just four for product marketing; the Product (or service), Pricing, Promotion and Place (distribution and partnerships) and then added three more to reflect the importance of service; People, Physical Evidence and Process.

In brief and avoiding academia, dealers can help reinvent themselves by considering how and with whom they can leverage this marketing toolkit.

The product and pricing I will leave to dealers as the experts, but the other 5Ps can help to provide an even better, distinctive car buying and financing journey for your customers;

Promotion – sell an experience, not just a car, using tools such as finance to make the package personalised, accessible and straightforward 

People – promote your culture, values and people online - humanise what you do

Physical Evidence – be comfortable, welcoming and transparent to buy from - ‘your car your way’

Process – remove any traditional ‘barriers’ and provide optionality for every customer from the car through finance, added value service, click & collect, deliver or just collet - let customers control their car buying

Place – identify partnership channels that add value

Bringing these elements to life online and in the showroom is crucial to being; relevant, known, trusted, liked and chosen.

The re-opening of showrooms is on the horizon and dealers must use the time available now to get fit and ready. The past year may have been led by survival, but see why CEO Mark Standish thinks now is the time to evolve and thrive.

The 7 Ps of dealership marketing

As dealership across the UK look forward to re-opening in the weeks or months ahead, they might just find customers are taking more notice of dealer’s commission. At the same time, as people look to save money and spend more time researching online, the market might expect a greater awareness of interest rates and creditworthiness. The FCA’s newest rules are designed to make sure customers have better knowledge of dealers’ finance commissions and are ‘more likely to engage with what is on offer.’

The updated rule means dealers need to make sure customers are aware of the nature and existence of any commission, fee or other remuneration ahead of any finance agreement being finalised. The prominence required in disclosing the existence of commission will likely lead to more and more people asking ‘how much?’.

The right to access commission details is not new, but in light of the other changes and inevitable publicity, dealers should anticipate more requests for full commission disclosure.

The commission to be disclosed to customers must be accurate and if the precise amount isn’t known, it must reflect the likely amount. It must include any commission, fee or other remuneration payable to the dealer/group by the lender involved. If you’re a MotoNovo dealer, you can speak to your Account Manager if you need clarity on what that means for you.

We catch up with our Chief Risk Officer, Stephan Bothma, for his thoughts:

 “Recent news headlines highlight the importance of dealers being prepared to respond to more customer queries about commission quickly and accurately as required by the regulator. Dealers must maintain a written evidence trail to prove that this information and broader commission disclosure requirements have been provided on a timely basis. Without this, defending any subsequent legal claims could be difficult.

“Commission disclosure is an ongoing risk. We know claims management companies have been increasingly active in motor finance. Compliance with the new commission disclosure rules and appropriate evidence is critical because accountability lies primarily with dealers and brokers” 

As dealership across the UK look forward to re-opening in the weeks or months ahead, they might just find customers are taking more notice of dealer’s commission. Catch up with our Chief Risk Officer, Stephan Bothma, for his thoughts...

Do customers question commission?

We don’t just lend to customers, we can also lend funds to help dealerships expand, purchase more stock or make improvements to their showroom. More specifically, our latest feat in dealer funding ‘Supplier Direct Funding’ allows our funded dealers to purchase vehicles quickly and conveniently through our trusted suppliers on their APAK Stocking Plan. APAK being a fully online system designed to help dealers monitor the stock they’re funding.

Collaborating with long-term wholesale funding software partners APAK, we’re switching up 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 MotoNovo, the auction house loads the vehicle to the dealer’s plan and MotoNovo pays the auction house 100% of funds, plus their auction costs directly.

This March, we’re helping our dealers free up cashflow by removing the admin fees for loading stock onto APAK with Supplier Direct Funding. This is just the latest move in our quest to help dealers navigate through the current lockdown, and come out the other side stronger than ever.

To help you understand the benefits of digitising your stock, we did a little maths. If dealers fund an average of 22 cars using Supplier Direct Funding with MotoNovo, the time they’d save by digitising the process adds up to four full days a year. Or, in money speak, the equivalent of £1,000 in savings. Add that on to the £450 saving dealers can make throughout March, and it can be quite significant. 

Chris Rowthorn, our Head of Operations & New Business comments:

“With well over £2.5M of used car stock already funded on our new digitised Supplier Direct Funding, we’ve been able to monetise the value of a change to traditional used stock funding. It costs nothing, removes the time required to load stock onto the platform, reduces the hassle of stock auditing and helps cashflow. The total time value may seem modest to some, but this is a repeatable benefit and represents the way digitising processes can help to make all dealers leaner and more profitable.”

Supplier Direct Funding allows our funded dealers to purchase vehicles quickly and conveniently through our trusted suppliers on their APAK Stocking Plan. Saving you on time, money and convenience, see how it could work for your dealership...

News - March 2021

An unprecedented year for dealer and customer support

The value of warranties as a marketing tool

The 7 Ps of dealership marketing

Do customers question commission?

What's the value of Supplier Direct Funding?

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