Author: Richard Jones, managing director, Black Horse (pictured)
Happy New Year!
As I write this before Christmas, we are awaiting publication of the FCA report on motor finance, which is likely to be a significant influencer for 2019.
There are ongoing uncertainties in the economic and political environment and customers are still confused over fuel choice.
All of these have been eroding customer confidence and we have seen consumers delaying big-ticket purchases.
New car registrations are down 6.9% on 2017 and used car sales are down 2.5%, although used car RVs have remained strong and the used car finance market has grown by 13%.
■ In a rising interest-rate environment, lenders must consider if customers can afford the product long-term, particularly if housing costs go up. Half of customers choose their car finance product based entirely on the monthly payment, with only passing consideration to overall costs, which could be problematic in the future.
■ Commission structures need to be more transparent. Structures where the customer rate is linked to levels of commission paid cannot be in the long-term interest of the customer.
■ Customers must have clarity of information throughout the journey from pre- to post-sale. Lenders can help, taking time to explore their contractual obligations as well as the protection and benefits that finance products can offer.
■ Finally, what other market do you know where more than 90% of customers start the buying journey online and more than 90% finish it offline?
How dealers, lenders and third parties manage customer transitions across channels is key.
Lenders and dealers have a key role to demystify and improve the car-buying journey for customers.
It is very important that we all play our part in making 2019 a prosperous year for the motor industry.