Author: David Webber
Complex car financing continues to discourage potential buyers
The automotive sector now accounts for its largest-ever share of the UK’s total exports at 11.8 per cent, according to figures from the Society of Motor Manufacturers and Traders (SMMT). More than £2bn of investment and 4,500 new jobs have been announced by the automotive industry so far this year.
However, despite the booming growth, our recent research has uncovered that one of the biggest factors still discouraging potential car ownership is the laborious process of arranging finance. Research supports this, with two thirds of UK consumers claiming that buying a new car is a difficult experience while 61% say organising the finance is one of the most challenging aspects.
A missed oppoortunity: why the automotive industry needs better finance options
This is a fantastic opportunity for car manufacturers to continue to build deeper, longer-lasting relationships with their customers. Frequency of purchases, an increase in customer loyalty, and brand reputation all stand to benefit. Indeed, 62% of UK customers said they would rather obtain their car financing directly from the manufacturer as opposed to their local dealership. Time and again, we hear that the prospect of arranging finance in the showroom is one of the most discouraging factors when it comes to buying a car.
Instead of a relationship built around a single exchange, manufacturers can begin an ongoing conversation with their customers throughout the life time of their vehicle ownership, by providing the digitals tools to deepen the engagement.
Direct financial management
Additionally, direct financial management could mean easier financial management. There were 2.47 million car sales registered in the UK in 2014, and in 2015 to date 46.3 per cent of these have been private sales to consumers with an average price tag of £27,219. The total amount currently spent, assuming these figures remain consistent, is £31 billion. However, making it easier to buy cars could almost double how often people do it, from the current average of 6.3 years to 3.5 years, and 39 per cent said they would change their car more often if car finance were easier to manage. Therefore making car finance easier to manage could grow private car sales by £9.6 billion to £40.7 billion. Through forging closer, simpler, better relationships with customers, the industry can seize this major economic opportunity.
Easier and more accessible car fianance
As these SMMT figures show, the automotive industry is continuing to demonstrate strong growth – UK new sales have registered their highest level for September on record, with gains in private, fleet and business sales. However, manufacturers could be looking to increase this growth even further, with the benefits from making car finance easier and more accessible to all.