‘Wherever there is change and wherever there is uncertainty there is opportunity’
- Mark Cuban, American entrepreneur and investor
In 12 words, this quote summarises the approach we must embrace in re-opening used car retailing. Changes following the COVID-19 lock-down period are inevitable. Nevertheless, people will still want to buy cars/vans/motorcycles. I believe that dealers are positioned perfectly to deliver the buying experience, products, services and reassurance customers will seek.
Economically and in terms of confidence, the impact of COVID-19 will continue to resonate; we should plan for a protracted period of austerity, uncertainty, economic hardship and rising unemployment.
The credit-crunch experience provides a guide to what we can expect as people adjust their spending activities. There was a shift to the greater value afforded by used cars and a ‘cool to be frugal’ ethos. Used cars, demand may also benefit from people delaying a move to new AFVs due to their high purchase costs. As well as value, social/working changes can benefit used cars sales:
- Social distancing will see some people switch from public transport/car-sharing to using their own car;
- Flexible working/proposed shift working patterns to reduce commuting/social interaction can drive interest in car usage;
- The lifting of lock-down and a reluctance to travel abroad can encourage ‘staycations’ and UK-wide travel;
- Remote working practices may see people move out of urban locations to areas where car ownership becomes more desirable.
Trust & Reassurance
In used car buying, people still like to see and touch cars and interact with dealers staff. In the immediate future, contact must respect social distancing with the phone and video-conferencing services having a greater role to play. Providing reassurance will be crucial and dealers can develop their proposition to help customers to make an informed buying choice.
- Bring your broader offer to life online - your ethos, history, people, capabilities and services, as well as cars. As the move to local shopping has shown in the crisis, people don't just want a low price; they value local service.
- Finance - the value of the payment holiday potential of HP and PCP finance has become evident in the last few weeks. Dealer finance can give you an edge and in the coming weeks as we expand our risk-based pricing product, the appeal of dealer finance can increase further.
- Added Value Services to ‘De-Risk’ Car Buying – uniquely in motor finance, we have continued to offer PPI services. Protecting themselves to cover life, sickness and unemployment risks saw more people selecting this service in March and we expect this type of reassurance from PPI and other ancillary services to remain compelling for buyers in the months ahead.
Dealers are not immune to the necessary market changes. Financial discipline is all-important, costs must be challenged and new business practices formed. Digital will be a crucial part of this change. Review your digital capabilities and distribution channels/partners to ensure the cost/value works for you while also assessing distance selling, home-delivery and click & collect options.
If our team and unique product and service portfolio can help, we welcome the opportunity to do so.
CEO MotoNovo Finance
Press release issued by MotoNovo Finance, May 2020