The door for change is knocking, are we ready to open it?
During April and May, independent research commissioned by Mann Island was undertaken to assess the subjective opinions of motor retailers right across the UK, about dealer finance today.
Certainly, many themes such as the desire for rapid underwriting and high acceptance levels came through loud and clear – and yes, they remain vital priorities across our business, but there were some other interesting insights that I’d like to share.
While it was abundantly clear that in the showroom, retailers are very much focused upon the ‘here & now,’ it seems the development of a digital retailing and financing experience is a back-burner issue for most dealers. If we have learned anything from the experiences of retailers such as ToysRus and Maplins this year, it is that we cannot ignore the pace of change and impact that digitisation is having, even on well-established brands.
Certainly, the emergence of omnichannel retailing is a threat, but it is also an opportunity. In our study, dealers felt that only around 30% of customers took advantage of their used-car-finance offer, yet FLA research suggests around 80% need to borrow from one source or another. Right now, there is a significant gap. Commonly, this gap is not about price alone, it is about service, convenience and ease.
All the signs are that the opportunity and indeed threat, to gaining or losing finance business will happen online. The broad consensus from the dealer community is that the trend to online is both inevitable and unwelcome. The challenge perceived by dealers is that the move to online will mean a loss of control in the financing process, something most dealers do not want to surrender.
It strikes me that there is a gap regarding the move to online that needs to be addressed. Like me, many leaders in the motor retail sector are digital immigrants; that is, technology does not come naturally and our thinking is often framed by the analogue world in which we grew up.
We and the industry have to change. Most dealers believe that in terms of finance they are doing a good job – and the improvements of recent years support this with significant growth in the new market supported by steady growth in the used finance sector. However, we cannot overlook the reality that in a disruptive market we need to change the way we meet the financing needs of consumers. Social change, digitisation and regulation are all pushing at the change door and dealers and finance companies need to be ready and welcoming as we open it.