A year on from rebranding, MotoNovo has finished putting the latest £1.8m investment from parent WesBank in place. Richard Brown talks to Karl Werner, head of sales and marketing.
This time last year, the car finance industry was getting used to the name MotoNovo, formerly Carlyle Finance, while pondering if any other lender would enter the motorbike market and researching the possibilities of electronic signatures (e-sigs). Today, Karl Werner, head of sales and marketing at MotoNovo, is looking back at how the Cardiff-based finance house has expanded since its £1.8m investment by parent company WesBank in November 2012 and explains why car finance is "a glorious market to be in".
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Werner explains the money was spent in three areas, funding "new markets, products and ways of doing things" on a list he
estimates the company is "a third of the way through". First there was the plan to increase the MotoNovo sales team and "maximise the potential out there". The lender now has approximately 50 field-based sales people, a 45% increase, making it one of the larger
sales team in the market, nearing completion on a recruitment drive begun three months ago. Werner says MotoNovo has hired a "fantastic quality" of people from both other lenders and from outside the industry, "some real fresh blood", from more than 1,000 CVs received, now undergoing a training regime which underpins the expansion. Recruitment began by planning desired candidates and territories, adding up potential growth areas, and was followed by a "thorough process" of both fully explaining to candidates how the company operates and working through how to present finance to dealers.
Secondly, MotoNovo has entered the motorcycle finance market, as well as considering other asset-based sectors, after two years’ research and the hiring of Mike Chilvers, former motorcycle development manager at First National Motor Finance and Close Motor Finance. Werner describes the uptake of bike finance as "awesome", weeks after going live, and the people within it "straightforward" and "refreshing to deal with". Werner explains the market, dominated by two independents (Black Horse and Close), "needed further competition" and welcomed MotoNovo.
"We’ve agreed a number of early partnerships and have a desire in the bike market to talk to manufacturers and increase the numbers of tie-ups we can have."
Thirdly, the company has launched its MotoClick e-sig product. Werner admits it wasn’t the biggest expenditure, but required significant work while being "meaningful", as well as "quick" and "fun" for dealers. Rather than a pad signature, MotoClick is a simple click-screen procedure, with an automated compliance component, able to run on a smartphone and which negates a roll-out of technology to dealers seen in other e-sig launches. A third of MotoNovo’s portfolio took this up within the first 10 working days following a six-week pilot, and Werner believes it will spread to other lenders within the year. Werner says he received his first dealer testimonial on 25 February from a "gobsmacked" large-scale dealer who fully processed a customer in 42 minutes. "He timed it, he was so excited," Werner explains.
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By GlobalDataRichard Brown: You’re moving into Scotland and Ireland next, what are the plans?
Karl Werner: Scotland, we’re there already, but we can do a lot better. We just need the right people on the ground. We researched
Northern Ireland. I have been there a couple of times, as well as engaging people to research that market. We were looking forward to getting in sooner; there’s no other system or policy changes needed. We will be recruiting in Northern Ireland within the next four to six weeks.
We’re excited, it’s a good market to be in. I’m ex-Lombard and First National; those organisations were pretty pleased with Northern Ireland, and the current providers, Black Horse and Close Motor Finance, have done well there, fair play to them.
Brown: Why get into motorbikes now?
Werner: A number of us had experience in the market, either from Wagon Finance or with First National. We were aware it was good news. We engaged research a couple of years ago on the numbers, the dealers’ experience and competitors’ landscape. If we were to do something the two most important things would be: is it a) successful and b) high quality? We didn’t want to play at it.
There was a pause to do the rebrand and then we turned our attention to bikes six months after the rebrand had finished.
What’s been a priority for us is that our guys can walk into a bike dealer. We’ve identified what the motorbike dealer is enjoying, the service he’s used to and the credit appetite and the products and services he needs. We also wanted to create a number of services and products the bike dealer would find compelling. In my mind, if an account manager can put a customer’s mind at rest in comparison to what he’s used to with the competition and then dazzle him with one or two new ideas, he’s quite likely to be given the chance on his first few proposals. To create a proposition with that amount of power took a bit of time, and it was time well spent measured by the feedback we’ve had from the Motorcycle Expo, the manufacturers we’re talking to and the dealers we’re winning.
We’re transacting with a number of bike dealers now. In the medium term I am keen to tie in with manufacturers; we have two deals done and I hope to more than double that in the next 12 months.
We were the first new entrant in over a dozen years, but I don’t think we’ll be the last. Rather than just two finance companies in that market, if you fast forward a year or so you will have four or five.
Our aim is open and simple: we want over 30% market share inside three years. That means gaining over 10% market share every year. We’re not hesitant; we’re all-in with the bike market.
We’ve deliberately put together a proposition that’s attractive to customers. We think if you give dealers something that’s easy to sell to customers in a showroom, they’ll thank you for it. We’re the first in market that has free seven-day ride-away insurance for customers.
Our total sales proposition for bikes is probably the widest, with the most products available from day one. We’ve got a solid subsidy offering, the dealer hub, and a bike-loan advisor website where customers can watch videos about the different ways they can pay for their goods. Our large amount of point of sale material for dealers, which is free, is all biked up. It’s not just our car stuff. It’s been a lot of fun and reaction has been really satisfying.
Brown: What’s the independent market like at present?
Werner: Good, and competitive. We’re going to have a lot of fun this year and the year beyond. There’s an eagerness for independents to lend so the terms of business have become more competitive. The UK economic backdrop still impacts the car dealer, but if you were to ask the five or six independents in the UK market they would all give it a thumbs-up.
We’ve been more open, and I like to think a little bit ahead of the game. We’ve invested heavily in the last few years because we want to double our market share. We have an 11% market share of the independent market and we want to get that to 20% in the next few years. But everyone, including ourselves, is enjoying being in this market.
There are a lot of opportunities. Obviously, a number of our colleagues and other companies have had some trying times with parents
and mergers and acquisitions, etc., but everyone has settled and they’re eager to have a go at it.
If you were to ask every captive and independent the two questions: "Are you enjoying being in this space?" they’d all say yes; and "Do you plan to invest and grow?" I would probably say yes to that, also.
Brown: Do you expect to see any other entries in it?
Werner: Yes, at least one within the next year or two. We’ve seen Hitachi come in recently and they won’t be the last. Looking at where the market is, what it can offer a lender, with the right framework; it’s a lot of fun. If you factor in an improvement in the motor market over the next three-to-five years as economic troubles die down, the curves all look right.
There’s no major doom and gloom around the corner. Motor finance is a buoyant and vibrant industry, which is amazing if you think where we were five or six years ago, with recessions kicking off and major independent lenders amalgamating or closing.
It’s a little UK success story. There are a lot of cars and vans being financed, and it’s going to get even better. It’s a glorious market
to be in.
Brown: Have you seen a rise in declines in the last four or five years?
Werner: No, our credit policies remained consistent. We didn’t have a strong personal loan or subprime appetite; therefore there was nothing for us to reverse. We’ve always been a prime HP lender, predominantly, there was nothing for us to fix when the problems came. Our appetite to lend is growing and we’re looking at products that can assist that.
Certainly, looking at Finance & Leasing Association figures from three years ago, you would have seen a lot of change in the acceptance appetite of independents, but it’s probably been settled for about 24 months.
Brown: What would it take for MotoNovo to consider subprime?
Werner: It’s a question of expertise. Any market rewards expertise and understanding. It’s why we took a long time researching bikes. We made sure we knew it inside out, made sure we had the right guy to see us over the top, and it’s paying dividends.
In these particular circumstances, when you’re lending money, fortune doesn’t necessarily favour the brave, it favours the intelligent.
Subprime guys have a rich history and deep understanding of what they do. One product we are very complimentary of, which another lender has, is rate-for-risk.
It works very well for them, they totally understand it, and it’s something we are looking at very closely. That is on the border of near-prime, but we’re making sure we understand it first.
If you’re going to do something new, you need do your homework. There are a lot of people in the market, especially subprime, that know it better than we do. We’re a prime business fundamentally.
Brown: How has the rebrand gone?
Werner: The rebrand has been one of the standout successes. It was a big project and it meant work and expenditure well in excess
of £1m to do it. The reason it worked is we brought our dealers into the research panel.
We launched not just to our team and to the media, but also to a selection of our top 100 dealers who came along to hear of the rebrand. So the Carlyle name seems to have wandered into the history books quite happily.
One year on we couldn’t be more pleased to be honest.
richard.brown@timetric.com
