Franks said the market was incredibly competitive, but dealers continued to be well placed alongside high street and online lenders when offering strong new and used retail finance deals.
“As automotive specialists, dealership staff should be able to provide competent financial product knowledge and detailed vehicle information,” he said. “Combining car and finance expertise in one place can significantly add to the customer experience.”
How the internet can help car dealers sell finance
Franks believes one of the biggest opportunities for dealers is to build on their online quote systems: “Many already make good use of their presence to highlight static deals, while a large number also have interactive HP and PCP quoting systems. A great deal of investment is going to further develop dealers’ online finance offers. This allows people to make comparisons before visiting a showroom.”
Gerald Grimes, managing director of Hitachi Capital Consumer Finance, believes flexibility, and risk based on a car not the buyer, are the two key measures that help dealers sell more financed cars.
“This strips away a lot of the hassle for the dealer, leaving them to focus on selling vehicles,” he said. “It also allows us to give the best deal to the customer, regardless of the car.”
Grimes said building a credit appetite around an individual, rather than the asset, made it possible to write deals that enhanced dealer earnings. “That applies to both metal profit and financial commission, with the flexibility to facilitate incremental deals,” he said. “More importantly, it gives customers what they want – affordable payments.”
Grimes said dealers should look to partner with finance houses that brought the technology and expertise to enable their business to thrive and complement their own knowledge. “Together, this can create a powerful partnership to drive sales,” he said.
Jason Nichols, head of portfolio performance at Black Horse, said dealers may move towards finance offers based on pricing to consumer risk, rather than the more traditional vehicle age. “Banks and direct lenders tend to price loans based on a customer’s risk profile, offering lower prices for lower-risk customers, and vice versa,” he said.
Motor dealers have the added benefit of convenience and ease because consumers can walk into a dealership, decide on a vehicle and arrange finance, in many instances in one visit.
Nicholls said prices, terms and conditions, and other added benefits that dealers offer consumers, were broadly competitive compared with those from traditional lenders.
Shaun Armstrong, managing director of broker Creditplus, said showroom staff’s knowledge of finance was important: “It is a highly regulated product and poor comprehension of what the loans offer and require from the customer can mean that they get mis-sold. This raises complex legal issues.”