As we look forward to 2022, the now-familiar reality of the global pandemic is dominating headlines. As I write this, the World Health Organisation is warning countries to prepare for potential new surges connected to the Omicron variant. It is an unwelcome but not entirely unexpected addition to our planning to which we must adapt. While we cannot fully anticipate Omicron’s impact, there is some clarity in other areas that can help plan for the year ahead.

The economy

  • The Organisation for Economic Co-operation and Development (OECD) has cut its growth forecast for the U.K. next year to 4.9% from 5.2%, but that is still the fastest in the G-7 group of companies.
  • Inflation is forecast to peak at close to 5% by the middle of next year before returning to the <2% target level by the end of 2023.
  • Wholesale money costs rose during December ahead of the Bank Rate increase as the Bank of England seeks to stem rising inflation.

We look set to enter an economic phase that will never have been seen by some people, rising inflation and potentially rising interest rates. Positively, forecasts see things being brought under control over the year ahead.

Car sales

  • The SMMT’s most recent data forecasts new cars registrations at 1.958 million, an increase by 17.8% on the 2021 outlook.

Electric and hybrid variants will dominate new car sales, but these will take time to feed into the used marketplace. Supply forecasts suggest that buyers can continue to expect significant order time for some vehicles; a six month wait is not unusual.

The continuing pipeline challenges and low new vehicle sales during much of the last two will continue to create supply pressure for the used vehicle market. Depending upon consumer demand, it seems unlikely that there will be any dramatic price realignment in the coming months. Still, I wonder if the price elasticity for used cars has met its limit.

Environmental, Social, and Governance (ESG)

Something new for this year’s outlook. I fully expect the abbreviation ESG to become mainstream in 2022. The investment community is looking increasingly to non-financial attributes when making investment decisions to identify risks and opportunities.

While there may be a financial imperative to ESG, the moral and reputational attributes should be driving a focus on increasingly essential issues; how businesses operate will come under closer scrutiny, and we can see this reality in areas such as planned financial regulation.

Dealer finance

2022 will be another year where regulatory changes will be front and centre. The FCA is expected to publish the findings of its supervisory work assess the ban on discretionary commission’s impact. Alongside this, it also plans to introduce a new Consumer Duty in July to set more explicit and higher expectations for firms’ standards of care towards consumers.

The Consumer Duty would require firms to:

  • ask themselves what outcomes consumers should be able to expect from their products and services
  • act to enable rather than hinder these outcomes
  • assess the effectiveness of their actions

While the FCA is happy with the approach of many firms, it is concerned that; “too many firms that are not adequately considering the needs of their customers and prioritising good consumer outcomes as an objective of their business activities.”

The outlook in three sentences

Planning for the year ahead, a word that constantly comes to my mind is ‘transition’.

A need to transition out of a pandemic and much of the unusual trading conditions that followed.

A need to enable and lead the transition to EV and alternative fuels and a lastly to continue the journey we’ve been on to better support and serve our customers, dealers and intermediaries.

Knowing the ambitions and plans MotoNovo and the Aldermore Group have to move forward in 2022, I’m very much looking forward to the year ahead.



Karl Werner, Managing Director