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Packaging crucial to finance take-up

Proof, if proof were needed, of the integral importance of finance packages to Renault was provided back in August when funding deals for the Clio III, fresh to market only last month, were finalised.

Central to that predominantly Selections PCP-driven programme was involvement of the Renault Dealers’ Association, a facet of the brand’s F&I planning, highlighted by Nick Mullis, Renault Financial Services’ retail marketing manager.

“If they don’t like a package, it won’t work,” he says. “Whatever brilliant ideas we have we don’t operate in the showrooms at the sharp end. Finance is part of our pre-launch discussions as much as the price of the cars.”

More so than with any other model the Clio, past, present and future is underpinned by burgeoning Selections business.

But, according to Jeremy Townsend, small cars’ brand manager with special responsibility for overall customer offers, Selections generates other significant benefits for the manufacturer, its retailers and seemingly receptive customers.

These range from sustained sales volumes, high re-purchase loyalty levels, moving customers upwards in follow-up deals, and nurturing a younger, relatively affluent clientele.

Since Selections was launched six years ago there has been a 10-fold growth in PCP adoption and it now accounts for 70% of new car customers who opt for Renault-backed funding.

That in turn has helped crank up the overall retail captive finance element for the leading French brand to between 60% and 70%.

Renault Sport versions of Clio have attracted a 70% PCP take-up in contrast to retail Laguna buyers, 47% of whom use 0% HP products.

Mullis adds: “About 82% of Selections customers remain with Renault products when they change cars. Creating loyalty also comes through retailer relationships with regular contacts in order to help with optional final payments.”

Tracking OFPs is considered pivotal to Selections’ success by avoiding the malaise of negative equity at the end of an agreement term, claims Townsend.

He explains: “We want customers to have positive, not negative equity. That is central to high customer retention rates and we monitor OFPs monthly, along with residual values in real terms. Some manufacturers create negative equity in order to produce very attractive monthly payments.”

Mullis also sees intervening and guiding customers towards the best time to renew a PCP programme, and with it the car, as a means of combating voluntary terminations.

By counselling customers via the network at strategically correct times, perhaps between 29 and 33 months when they are in a position to deal Mullis reasons Renault avoids allowing PCPs to exist in a vacuum.

The RV tracking radar resulted in anticipating negative equity on specific 1.6 Scenic variants and supporting customers to change their cars says Mullis after residuals in the overcrowded MPV sector were depressed. That mechanism is also used to engineer specification or model upgrades.

Bundling together key car budget payments is not on Renault’s F&I agenda as Townsend believes: “It is human nature for a £149 monthly finance payment to appeal more than a £229 rolled-up fee. People take the lower figure and sort out the rest themselves. We tried a package involving everything bar insurance. A take-up rate of just 1% laid it to rest.”

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