Strong residual values (RVs) that help create an attractive motor finance proposition will be crucial to the success of Chinese manufacturers entering the UK market, iVendi is predicting.
Darren Sinclair, CCO at the motor retail technology specialist, said that so far, used values and prices for these electric vehicles (EVs) had been quite competitive, but that volumes had been limited and the developing future picture was difficult to predict.
“It’s going to be really interesting to see the impact of these car makers in the EV market over the next few years. MG have been successful with the MG4, which has a good headline PCP price, and many other manufacturers are following them.
“There has been much talk about the quality of their product, which seems reasonably good, and the pricing, which is very competitive without being cheap, but not so much about the finance offering, which will be central to their progress.”
He added that while the Chinese EVs seen in the UK so far had been keenly priced and generally attractive, these qualities would be of limited impact without the right finance offering to support them.
“Delivering competitive and easily accessible motor finance will be essential to the success of Chinese manufacturers entering the UK market and this will very much depend on finance deals that will be based on predicted RVs.
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“What we have seen so far from EV models such as the MG4 is a good RV performance and a professional attitude to remarketing but this is one model from one manufacturer with some longstanding brand equity.
“Much less familar new market entrants will be soon targeted at different points in the market but there will be a large number of them with a large number of models and little or no track record. It’s pretty much an unprecedented situation and predicting the outcome is quite difficult.
“Doing everything possible to support values – from establishing a brand reputation through to generating confidence among used car dealers and buyers – is going to be essential for these manufacturers and the motor finance companies offering their products, whether these are owned by the manufacturer or a third party.
“It’s ultimately all about creating RVs that allow an attractive headline PCP rate to be delivered, one that will overcome any doubts that the customer may have about buying from an unknown brand with no UK track record. This is a much more significant factor than the list price.”
Darren said it was also important that the supporting technology made the motor finance decision making process as easy as possible.
“We’re increasingly talking to manufacturers, not just the new Chinese ones, about the importance of using a platform that allows car buyers to undertake a fast, easy, compliant customer journey that matches them with the right finance product for their needs to make the purchase they want. Certainly, this applies to all car makers in both the new and used market but is arguably more important for new entrants who need to prove their credibility.”