No shortage of finance
providers keen to help UK car dealerships break into the internet
audience.
Go deeper with GlobalData
Consultancy firm Capgemini has reported that 46% of
consumers now want to buy vehicles online. It stands to reason,
therefore, that they will be looking to get finance there too – but
where will this leave traditional dealers?
After all, consumer willingness to
buy insurance online has nearly taken the ‘I’ out of the F&I
director’s role in recent years. Could it be that the internet will
take finance out of the dealership altogether?
Almost certainly not. Talking to
some of the UK’s most ambitious proponents of online finance
selling, it seems that business on the forecourt could have a lot
to gain by linking up with those businesses selling finance on the
web.
Online specialist finance broker
Carloan4u says its own direct-to-consumer sales model is anything
but a threat to dealers, and is instead helping them win new
business beyond their local territories.
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By GlobalDataThe introducer, which has grown
every year since its foundation in 2006, is virtually unique in its
model of getting consumers approved for finance before giving them
the option to browse dealer partners’ stocks online.
New customers nationwide
Business development manager Carl
Eccles says this approach has grown popular with dealers as a way
to promote deals and gain new customers nationwide at a time when
most retailers are resorting to their existing contact books for
repeat business.
Eccles expects the model to take on
a new spurt of growth with the company’s entry into the PCP market
this month, on the back of a growing relationship with PCP
specialist funder ALD.
Under the new PCP scheme, Carloan4u
will take information on stock and PCP promotions from dealerships
across the UK, and advertise them to consumers online.
Eccles said: “It will give dealers
a bigger audience for promotions, as well as a chance to move
pre-registered and early new stock.”
Captive giant BMW Financial
Services shares Carloan4u’s vision for the potential to champion
finance online, but still sees a physical visit to a dealer as an
integral part of the finance sales process.
While the lender’s US and German
arms are entrenched in direct-to-consumer sales online, its UK
division has no immediate plans to use the model, although UK
marketing manager Joe Pattinson says it is “thinking at length
about how the younger generation of consumers want to interact and
buy finance”.
The company sees the online
environment as a place to make people aware of the finance options
available to them, before bringing their business in through the
dealer channel, Pattinson says.
“It’s about getting people to
understand earlier in the buying cycle what they can afford and
what to expect – then to get them into a dealership and talking to
the real experts” he said.
The first step has been to offer
BMW group franchised dealers a new online finance calculator, as
well as information on different financial products to make
available to consumers online.
Next up, and being piloted now, is
the ability for franchised dealers to offer live chat facilities,
allowing prospective customers to talk to dealers about results
from the finance calculator application.
These services are aimed at giving
dealers the ability to raise UK consumers’ fledgling understanding
of finance; something which Pattinson thinks is keeping the British
market from being ready for direct-to-consumer sales as seen in the
US.
“While the US finance model sees
consumers keen to compare leasing offers online, British culture is
much more about ownership,” Pattison added.
“The success of PCP shows that
people are beginning to think differently though, and along similar
lines I imagine we’ll see an increase in the volume of PCH volumes
being done as people get into the US-style mindset of paying for
usage.”
With BMW Financial Services’
keenness to educate consumers on the price benefits of products
like PCP, would the company be willing to take on business from a
third party website comparing different captive finance offers?
“We would consider buying into a
comparison site or something similar,” said Pattinson. “But we
would need to make sure we were still introducing consumers to our
dealers.”
Dealers not cut from
equation
Mark Peatey, co-founder of website
financeacar.co.uk, believes he can provide a way for lenders to tap
directly into the growing market for online finance purchase, while
still avoiding cutting dealers out of the equation.
His company was founded in
mid-2010, and bills itself as the first and only car finance
comparison site.
Like Pattinson, Peatey believes
that one of the great strengths of the online channel is the
ability to educate consumers in the quirks and advantages of
different financial products.
He thinks that, with an
overwhelming majority of consumers starting their buying journey
online, it makes sense to get them interested in finance offers as
a first point of call, before introducing them to the stock of
dealer partners – a method already confirmed as successful by
Carloan4u.
Financeacar.co.uk also takes on
headline prices and deal promotions from manufacturers, and can
then direct potential customers towards franchised dealers in their
home region.
“Dealers like us because we capture
customers early in the buying cycle – and the dealer has an idea of
customer credit quality even before they meet them,” Peatey
said.
While UK car dealerships are still not renowned for their
ability to promote their wares on the web, it seems there is no
shortage of finance providers looking to help them reach the online
audience.
