AM: Standardised processes in dealerships? Is this happening now on a large scale?
AG: The large plcs are really running with this now. Broker partners we work with are taking this extremely seriously and are also working closely with us to come up with a model that would work for them as well as their dealer partners.
AM: The FCA is a quango. If there is a change of administration in the General Election or enthusiasm within government, it will be weakened, have funding reduced, it’s attention will go somewhere once the payday lenders have been dealt with. Isn’t there a danger, the threat will diminish and so the pressure to change will also?
AG: We've missed quite a few tricks in the past and, again, we're not hanging our new pricing model on the topic of FCA only. The key message for us is simplicity. And simplicity is what the customer is asking for and it is the backbone of the success that, more generally in retail, Apple and Amazon are having.
To bring an end to the model where a customer comes in and doesn't really know what they will end up paying, with a confused sales force tackling different rates, products, commission structures, is a prerequisite.
So, even if the FCA was to go away tomorrow, focussing on simplicity and transparency is the right way for us to deal with our customers.
AM: Success in the new car market last year was down in a large measure to PCPs. It's often repeated that you could buy a Mercedes for £199 a month for the first time.
But there is concern about how PCPs are being pushed into the marketplace – in one instance dealer take cash or sell on a PCP - and whether this is entirely treating the customer fairly. Is there the deep-dive into the customers circumstances taking place to ensure this panacea product is still appropriate.
AG: We need to make sure that customers are qualified properly and educated on the options, whatever they are, with the process documented.
At the end of the day does a customer fully understand the benefits and the disadvantages of taking out a PCP product – or an HP product? If that is the case and the customer then decides to choose a PCP, even nine times out of 10, then there is no issue.
Plus, because of the monthly instalments being potentially either lower with a guaranteed RV, a PCP can actually be potentially a good thing for affordability. However, it's the ownership structure that needs to be then considered in choosing PCP over HP and that is again something that can only ever be done properly in the sale process at the dealership.
AM: Do you believe the credit sales’ transparancy would mitigate the impact of a cooling new car market in 2015?
AG: It all depends how the industry embraces customer centricity, simplicity and transparency. I really do think the industry, can push our share of car financing from currently 75% to in excess of 80%. Q4 could see us creep closer to the 80%, and then probably in 2016 we should be pushing through the 80% barrier.
AM: What could prevent this?
AG: Those partners that adopt the new principles will see success come their way. Hampering growth will be the segment of the marketstuck in the old ways.
And therefore if we talk about failure to grow beyond 80% penetration, it will be due to a large segment of the market staying rooted in the old world of complexity, individual profit optimisation by deal, and a confused sales force.
AM: In a year’s time what will be the industry’s points of focus on this issue?
AG: There will still need to be a debate on what is best for the customer – not mention topics like commission schemes and how dealers are paid because that needs to come to a close now - but what more can we do to treat customers fairly? How can we actually almost be seen as a benchmark within the corporate UK on this issue.
AM: There could be a benchmarking system, open to the public?
AG: We’re not strong at inviting constructive and open feedback from customers. I wouldn't book a holiday without checking customer reviews on TripAdvisor.
Why do we as an industry open ourselves up - at least those that have subscribed to the principles of treating customers fairly - to a customer rating, allow customers to understand how good a dealer is treating others? This would be one example of where we would demonstrate transparency.
AM: Finally, are there macroeconomic factors – the election – that could restrict growth?
AG: I don't think the elections will have that big an impact on our industry. Any government will be very keenly interested in success for the automotive industry in the UK.
What happens to the Chinese economy and the global economy overall, in the Eurozone and the repercussions on the general mood in the UK that could affect peoples' buying behaviour are of greater concern.