Realising the used car finance opportunity
Approaching 2,000 dealers are now live on MotoNovo’s innovative MotoRate risk-based pricing, model designed to meet the Financial Conduct Authority (FCA) changes to motor finance. The impact of MotoRate on their used vehicle finance performance has been exceptional. Finance sales from dealers switching to MotoRate have increased by over 70 per cent YoY consistently over recent months.
Commenting on the success, MotoNovo’s Deputy CEO Karl Werner reflects;
“While we recognise that the used car market has performed well since initial lock-down measures were eased, we can be confident that used car finance growth of over 70 per cent represents a very significant improvement in used car finance performance. The dealers who have switched to MotoRate are demonstrating just what is possible with a fresh new, FCA compliant pricing model and are tapping into a significant opportunity.”
The opportunity Karl refers to, is a significant one with used car sales significantly exceeding the new car market. In 2019, the Society of Motor Manufacturers & Traders (SMMT) reported that there were 7.9 million used cars bought in the UK and a little over a million new cars purchased by private buyers. However, where new car finance penetration of retail sales in 2019 was 91.7 per cent, according to the FLA, used car penetration performed in the 20 – 40 per cent penetration range typically. This penetration range has been a long term trend with some outliers, above this level, but plenty more operate below it. As Karl notes;
“The data on car sales and new car finance data crystallises the available opportunity gap. We are talking about the potential to gain many thousands of incremental used car and van finance sales. Where dealers can be encouraged, with MotoRate we are demonstrably helping dealers to start realising this opportunity with a financing approach that delivers good outcomes for customer and dealers alike.”
The considerable improvement shown by dealers using MotoRate is due to the way in which MotoRate works. It enables dealers to advertise and promote more competitive and relevant rates to customers driving enquiries to the dealership. This promotional offer is then coupled with a highly efficient showroom and/or online customer journey from quotation to acceptance, turning the enquiry interest into cars sold. Everything is highly transparent.
In addition, it has been evident that the vast majority of dealers are eager to embrace the changes the FCA are seeking and the success of MotoRate is due in no small part to the proactivity and engagement of the dealers that have bought into its ethos and operating processes. MotoRate is Dealer-Proven; it works very evidently.
Press release issued by MotoNovo Finance, October 2020
