Following the UK Court of Appeal judgment on Friday 25th October, we took the decision to pause new business from Monday 28th October while we worked to mitigate the legal implications to protect our dealers, brokers and customers.

We have now made the necessary adjustments to ensure the business can operate within the legal requirements set out in the judgment and are now open for new business in MotoNovo.

We do understand the pause to new business created challenges for you, and we thank you for your patience and support while we have been navigating the impact of the judgment. Dealer partners are encouraged to reach out to their account manager with any questions they may have during this time. Find out more here. 

Important update: We're back open for business

Interested in becoming a MotoNovo dealer? Get in touch today.

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February was a record month for the number of vehicles held in stock by dealers

39% of stock-funded vehicles settled during February were on stock for less than 30 days- up from 27% in January

Overall, vehicles were on stock for just 43 days.

That demand for used vehicles has accelerated, and they are selling more quickly; these are the key insights from MotoNovo Finance’s latest Used Vehicle Inventory Report.

Used stock funding provides a unique perspective on used car sales and buying activity because, in real time, a lender can see how much stock dealers are holding, how quickly it is being sold, and which type of stock is selling. 

Dealers of all sizes right across the UK take advantage of MotoNovo’s broad range of used stock funding options, making the business one of the country’s largest and longest established used vehicle stock funders for dealers. The significant scale of stock funding data that we hold means that along with the technology and access to funding, MotoNovo’s Used Inventory Report enables dealers to benchmark their performance, complementing other resources.

The picture of increasing demand by retailers for stock and rapid stock turn, just 7% of stock fell into the over 120 days criteria, a figure which has been consistent over recent months is a clear indication of an active used car market. While it could be argued that stock turn is such that, for the right stock, dealers could be more ambitious in their pricing, the critical observation is one of market stability after last year’s used car value realignment, which is crucial.

The trends in used car values that we have seen since Covid-19 have been ‘dynamic’. The unprecedented rise in used value, which was sustained for far longer than could have been expected, arguably created a false landscape of vehicle values. This picture was further complicated by the emergence of EVs, notably Battery Electric Vehicles (BEVs), where initial low supply was met with relatively high demand, which artificially inflated prices. Last year, values for all vehicle types were realigned.

Today, we have greater consistency, and this stabilisation in vehicle values is a positive factor overall. Whether as buyers, sellers or residual value setters, dealers, customers, and funders have more certainty.

The emerging values for used vehicles are more closely aligned with historic depreciation trends. However, these may surprise customers, some of whom may have inflated value expectations for their existing cars. It is why it is so important that across the industry, we work to communicate and explain the emerging used vehicle pricing benchmark and the associated reasoning.

As always, nothing is certain, and the impact of the shift to EVs, fuel prices, rising insurance costs and location nuances will all affect used car pricing. However, as we move into a peak used car retailing period following the new car plate change, stocking days will be a crucial metric to demand, stock mix and profitability; I urge dealers to maintain a close eye on this number, which I am sure many will, and react to it in stock buying and pricing as appropriate.

Chris Rowthorn, Motor Sales Operations Director

That demand for used vehicles has accelerated, and they are selling more quickly. Find out more from our latest Used Vehicle Inventory Report.

MotoNovo Finance's latest used vehicle inventory report

The latest Bank of England data on money and credit, published on February 29th, revealed that while some people paid off mortgage debt in January, net borrowing through consumer credit increased.

Individuals repaid, on net, £1.1 billion of mortgage debt in January compared to £0.9 billion in December.

Net borrowing of consumer credit by individuals rose to £1.9 billion in January from £1.3 billion in December.

The news that some people were able to reduce their mortgage debt in January followed a similar move in December. Overall, the annual growth rate for net mortgage lending was negative for the first time since the series began in March 1994, at -0.2%, a new series low. 

The likely explanation for the trend is that people are using savings to pay down higher mortgages that have seen rates rise sharply as existing fixed rate deals ended. Another interesting mortgage statistic from the Bank of England data is that net approvals (approvals net of cancellations) for house purchases, which is an indicator of future borrowing, rose from 51,500 in December to 55,200 in January. As we head towards Spring, when people traditionally start their house moving plans; we are beginning to see positive activity.

Perhaps of greater interest is that net consumer credit borrowing rose to £1.9 billion in January. The increase was driven primarily by higher borrowing through credit cards. However, net borrowing through other consumer credit forms, including dealer finance and personal loans, also increased.

Aligning credit news with consumer confidence data published at the end of February by GfK, we can see that the increasingly improving consumer confidence levels stalled in February. It is too early to assess the impact of the recent Spring Budget. Still, the announcement of another cut to National Insurance contributions and the promise of more help for parents receiving child benefits will hopefully ease many households' financial pressures.

The good news that came out ahead of the Budget was that optimism for people's financial situation for the next 12 months did not slip back, and zero is far better than the -18 score from February 2023.

Of particular interest to car dealers, the Major Purchase Index fell back by five points to -25, but again, this is 12 points higher than February last year.

So, what is the overall ‘take-away’ for dealers from these two pieces of insight? People are more confident in their finances than last year, and they are more open to a major purchase. We hope this helps.

The latest Bank of England data on money and credit reveals that net borrowing through consumer credit increased. So, what does this mean for dealers? Find out more from Motor Sales Operations Director, Chris Rowthorn. 

Money and credit news from the Bank of England

International Women’s Day takes place on March 8th, and as always, we'll be celebrating it and encouraging people to join us. International Women's Day is part of our broader commitment to Diversity, Equity and Inclusion (DE&I) in all its guises. And this year’s theme, Inspire Inclusion, adds an extra DE&I dimension to the day.

Inspire Inclusion encourages everyone to recognise the unique perspectives and contributions of women from all walks of life, including those from marginalised communities.

Regardless of gender, ethnicity, age, religion, sexual orientation, disability or social status, equal opportunity for all is so important to forge a better world. International Women’s Day is an opportunity to champion opportunity and equity for women, but we cannot do so without recognising that DE&I is part of advocating inclusivity. 

As a business, MotoNovo’s commitment to DE&I is very public, and its impact is encouraging. The business’ Senior Leadership Team has a 60/40 (female/male) split, with all the members involved in a range of DE&I initiatives led by Managing Director, Richard Jones, who is a member of the Automotive 30% Club, a network of over 70 automotive CEOs and MDs who have committed to be inclusive leaders and build diverse gender-balanced businesses.

A broad series of initiatives have been established to enhance gender diversity in MotoNovo. These include a Women in Leadership programme, now in its second year; the ‘Leading the Way’ gender-balanced middle to upper management talent development programme is helping to prepare female colleagues to make that next step into senior leadership; and the gender-balanced executive development programme prepares high-potential female colleagues for an executive role. 

Given the business’ broader commitment to DE&I, gender-led initiatives do not operate in isolation, and other support programmes, including ‘Mission Include, ' are in place to support colleagues from underrepresented ethnic backgrounds.

In the world of DE&I, gender is just one area of focus; MotoNovo is committed to creating an inclusive environment where every team member can flourish professionally and emotionally. The impact is evident.

The Impact of DE&I on the Business Team - Pulse Survey (Oct 23)

77% of colleagues responded positively to the statement, ‘We have made progress towards greater diversity, equity and inclusion at Aldermore Group’.

 81% of colleagues scored positively to ‘At Aldermore Group, everyone can succeed to their full potential, no matter who they are.’ 

Overall business engagement has improved from 45% in 12/21 to 73% in 10/23 

Across Aldermore and MotoNovo, March 8th will see the business celebrate inspiring inclusion and live this commitment in the way it continues to operate. It is a business that is proud to provide opportunities for everyone.

International Women's Day is part of our broader commitment to Diversity, Equity and Inclusion (DE&I) in all its guises. And this year’s theme, Inspire Inclusion, adds an extra DE&I dimension to the day.

International Women's Day 2024: Inspire Inclusion

Much heralded in recent years, the agency car sales model, which at its most simple, would see manufacturers sell cars directly to consumers, operating with control over national pricing, bypassing the traditional dealership model, which would have a new retail role in test driving, delivery and aftersales, has seen the initial enthusiasm and commitment wane recently.

Initial manufacturer enthusiasm coincided with the global pandemic and its immediate aftermath. At the time, online sales and delivery dominated car sales, but subsequently, the trend has been towards an omnichannel experience. 

Another impact of the pandemic was a shortage of semiconductors. The impact on new car supply was dramatic, as was its effect on new car pricing. A demand-led market saw an end to discounts and strong new car margins. Again, this trend has changed, and supply is exceeding demand for many brands. It is a situation that, for some, is exacerbated by the Zero Emission Vehicle (ZEV) Mandate.

For some manufacturers, the net result is that they could find themselves sitting with unsold stock on their balance sheets. Under the historic dealer model, they could rely on dealers to incentivise dealers to buy and retail such excess inventory.

The final dilemma for the agency model is a legal one. Switching to a ‘genuine’ agency model is fraught with legal curve balls; my first paragraph summary is very much a simplistic interpretation!

BMW Group launched the rollout of its new sales, starting with MINI in Italy, Poland and Sweden. The remaining European countries, including the UK, whose MINI launch has been delayed countries, will follow ‘gradually’, with BMW scheduled to transition from 2026. 

In September 2023, Stellantis tested their agency model in Austria, Belgium, Luxembourg and the Netherlands, with an initial plan to roll it out across Europe in 2024 for premium and light commercial vehicle brands and for large volume brands by 2027. It appears it did not go as hoped. In December, a spokesperson for the business commented; "The pilot phase did not give the expected results on the IT side, so our aim is now to reduce complexity in comparison with the previous plan,"

Again, in December, the new head of Stellantis UK announced that their plan to roll out agency contracts had been paused.

At the end of March, JLR announced that it had cancelled plans to move to an agency model and is instead refocussing on a ‘refined’ franchise model with 'elevated concierge levels of client care'. The business has also said it will look again at agency in late 2027. 

Lotus considers dropping agency for a franchise

In November, Auto Retail Agenda published a story suggesting that having operated agency agreements for the previous two years, Lotus was understood to be planning a return to the franchised sales model. 

Introducing an agency model, especially a ‘genuine’ agency situation, was always a major step with plenty of regulatory and logistical challenges. It feels appropriate that some manufacturers are slowing down their processes. The market landscape has changed dramatically since the high-water mark for agency models. The push on BEVs, the potential balance sheet inventory costs and simple logistics are all causes for a reassessment.

Some change still feels inevitable, so seeing how the market adapts will be interesting.

Hear from Commercial Sales Director, Debbie McKay, on the changing landscape for agency models. 

Agency model update

The cost of car insurance continues to hit the headlines, with the average annual price in the UK hitting a record of £924, according to the latest index published by the price comparison website Confused.com. That is up by well over 50 per cent year on year.

Following on from one report on rising insurance costs, the website Compare the Market recently highlighted that while young drivers favour an automatic car over a manual one, many would be better off when it comes to their insurance to learn and choose to drive a manual car.

Younger drivers on automatic-only licences pay the highest of all car insurance premiums. In 2023, the typical automatic-only driver aged under 25 was quoted £2,803 a year for their car insurance, 

Young drivers of cars with automatic gearboxes paid £490 more for cover than those with full licences in 2023 - but £760 more in 2024.

According to insurers, the rationale for higher premiums is that automatic gearboxes are more expensive to fix and because automatic cars cause more claims. 

The upward trajectory for car insurance is going to remain the same. In a recent letter to MPs, the Financial Conduct Authority said in a letter to MPs that "predictions show further increases in the year ahead." 

While the cost of insurance has always been part of car buyers' decision-making process, the dramatic rises over the last year are something dealers should consider in their advertising and stock purchase approaches.

With the rise of insurance prices hitting the headlines, what affect is this having on dealers approach to advertising and stock purchases? Find out more. 

News - March 2024

MotoNovo Finance's latest used vehicle inventory report

Money and credit news from the Bank of England

International Women's Day 2024: Inspire Inclusion

Agency model update

Stock buying and adverting: insurance costs rising at record levels

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