At the recent Apak Global Auto Finance Summit, MotoNovo’s sales distribution manager, Dan Cholewinski, presented an update on findandfundmycar and its role as a partnership model. He also outlined why, in the face of an anticipated increase in motor finance regulation, the model represents best practice for dealers. Graham Filmer reports.
Eighteen months ago, MotoNovo Finance launched what it saw as a distinctive marketplace concept for car retailers, findandfundmycar.com. Its crucial differentiator was that it combined used car sales and dealer-derived finance in one neat “dealer-centric” model.
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At the Apak Global Auto Finance Summit, MotoNovo’s Dan Cholewinski pointed to the broader marketplace concept and identified Airbnb, Just Eat and Uber as three organisations that, over time, have succeeded in their markets without owning a single bedroom, restaurant or car respectively.
Instead, they leverage other people’s or businesses’ products, and provide an easy-to-access channel for consumers. In each, he pointed to need for a symbiotic relationship that requires that the value created and rewards are equitable.
The market leader for automotive retailing for used vehicles, Autotrader, has transitioned from its printed classified origins to a digital marketing proposition, and its brand is often seen as a byword in used car search activity. The business’s profile enables it to charge dealers a fee for promoting their cars on the site. It also offers other services such as F&I to the car-buying public.
Stock is Crucial
Stock, argued Cholewinski, is a used car dealer’s differentiator, and there is a skill in buying, preparing, transporting, stocking and retailing such stock.
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By GlobalDataUnlike other products, it is a depreciating asset. As both Virgin Cars and Tesco Cars found, used car stocking can make or – in their cases – break a business. No stock, no business, noted Cholewinski, adding that as owners of the stock that marketplaces need, dealers are in a stronger negotiation position than they may realise.
After an extended period of profitable growth, the used car market has, like the new market, become more difficult. Not only have sales fallen back, but so, crucially, this year have used car values. Pressure is on dealer margins, and for the first time in a decade, the expression ‘every penny is a prisoner’ has resurfaced.
Regulation Change Looms
In addition to chassis margin pressure, FCA changes that look set to impact both finance and insurance in the coming months could impact dealer profitability further.
However, rather than being a threat Cholewinski pointed to the opportunity that is baked into the findandfundmycar.com model.
Even if F&I income is squeezed by new regulatory standards, the service remains a vital marketing tool for dealers. An estimated 80% of consumers need to borrow from one source or another to conclude their car purchase; however, according to Cholewinski, used car finance penetration can be as low as 20% compared to over 90% on new cars.
It is here that the collaborative partnership model offered by findandfundmycar is seeking to gain traction with dealers. By leading a dealer’s digital marketing with monthly payments, using the dealer’s finance, findandfundmycar is helping dealers to increase their finance penetration. Moreover, it does so by being highly compliant and customer-friendly to deliver what Cholewinski referred to as a “triple win” – working for buyers, dealers and MotoNovo.
If the business can deliver car sales, lower marketing costs and increased finance penetration in a compliant manner, then it has a lot to offer dealers, but can it?
Dealers Have a Choice
Since launch, findandfundmycar.com has also seen other players enter the market. MotoNovo has committed to a three-year investment plan for the business, and series of upgrades are scheduled for the months ahead; there is a clear long-term commitment to build the brand.
The principal battleground for all the marketplace providers is, as Cholewinski noted, access to dealers’ used stock. If enough dealers move their stock to a site that promotes itself as ‘dealer-dedicated’, then inevitably, a virtuous circle of increasing traction with car dealers, web crawlers and car buyers will follow.
None of the often-touted market disrupters changed their markets overnight: Airbnb and Uber have both been in market for around a decade each, and Just Eat has been around since 2001. Each has evolved their models and leveraged broader changes in their respective trading environments.
Margin pressures and increasing regulation are, as Cholewinski noted, changes that are encouraging more dealers to look to findandfundmycar and its distinctive partnership approach. It certainly created interest from a global audience of motor finance business leaders at the summit!
by Graham Filmer
