There are always running themes causing a domino effect across the industry, but over the last couple of months, Sarah Kozlowski, national sales manager of Moneybarn, has seen a number of new trends affecting the market.
New car registrations were down 29% in 2020 which has seen a reduction in used car stock. This has driven used car prices up by 12% since January 2020. New car manufacturers are finding it difficult to get hold of enough semiconductor chips to finish the production of new cars, which means customers are being asked to wait for their new cars.
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These customers don’t want to, or can’t, wait for their new car and have instead been looking for a vehicle on the second-hand market. This has increased demand for used cars, which in turn reduces stock and drives up prices across the market.
We are seeing more dealers setting up their own car buying services, much like Peter Vardy who have recently set up GoodByeCar. It works very similarly to We Buy Any Car and is receiving rave reviews from clients. This will help dealers generate that much needed used car stock.
I’ve also seen the risk appetite amongst lenders increase across the board. With Moneybarn seeing increased competition in the market, whether that be from new companies entering the market or those already in the market expanding their rates. Rates have been increased and/or decreased in order to expand products and to enter new markets such as prime and sub-prime.
I’ve also seen a lot of different car finance providers developing their marketing strategies to increase brand awareness and sales. This includes a variety of different channels such as sponsorship, TV advertising and social media. As an example, at Moneybarn we’ve partnered with the Professional Darts Corporation as well as advertising at Championship football.
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By GlobalDataA changing landscape
It’s not only product rates and expansions that are helping companies to diversify but also the new markets and products that they are entering into. This could be from just financing cars to expanding their product range to vans or adding another financing product such as leasing or PCP to their roster.
We ourselves have a few new products in the pipeline that we hope to share more about with everyone soon.
An obvious, but of course prominent trend, is an increasing consumer interest in hybrid and electric vehicles. Recent research revealed that said that electric cars accounted for nearly one in six new car registrations last year and out of the 7m people wanting to buy a car in the next 12 months, 3m of them have said they will be buying green, which shows the huge shift that’s happening in the market.
At Moneybarn we are currently in the midst of developing our existing hybrid and electric offering so we can help more people get the vehicle they want.
The automated future
A trend which is great for decisioning and customer outcome is the increased use of automation throughout the onboarding process and overall customer journey. I’ve seen the increase in use of open banking help lenders make more accurate decisions and allow customers to know the outcome of their decision quickly.
At Moneybarn, we’re extremely keen to implement more automated systems, as everyone should be in the industry. We’ve just partnered with Credit Kudos to leverage their Open Banking insights to enhance our decisioning and are one of the first to adopt their latest technology, Assembly, an Open Banking decision engine.
“If everyone is shopping online and used to a quick response, you will lose leads if you don’t remove unnecessary barriers to their journey.”
With the use of this new technology, customers will now have an instantaneous decision as to whether they are accepted or declined, instead of having to wait for the manual process of a bank statement review. Their Open Banking insights will also allow us to gather more accurate customer centric data to provide customers with more personalised and suitable solutions.
Since the start of the pandemic customers are now, more than ever, using the internet to shop and research products, even when buying a car. They had no choice during the lockdowns and now 90% of customers perform online research before purchasing a vehicle.
This is just another reason why lenders need to offer a more automated service. If everyone is shopping online and used to a quick automated response, you will lose leads if you don’t remove unnecessary barriers to their journey.
A permanent shift
Lastly, although not least, there has been a shift throughout the pandemic as to how customers are choosing to shop. We’ve seen car deliveries, for example, initially start as a need, but are now most definitely here to stay.
This also supports quick decision making, which is necessary to keep customers interested in your product if they going to shop completely online. If more customers are shopping online, and only shopping online, then the online journey needs to be optimised and provide the best service possible.
At Moneybarn we’re always thinking of how to optimise our online journey, and in fact this year we introduced our own vehicle finder tool in partnership with Exchange and Mart. This shows customers a range of cars that we’ll finance, all within a 50-mile radius of their home, giving them an end-to-end experience and helping them get where they need to be.
Many more trends will come to the forefront of our industry as consumer and competitor behaviours shift. The key is to stay aware and be ready to adapt, so that you aren’t left behind as the industry grows and develops.
