Dealer finance is continuing to support dealers to drive sales in the used car market, as the bounce-back in sales proves encouraging for the sector, said Mann Island Finance.

John Hughes, managing director of Mann Island, wants to ensure that dealers recognise that the positive approach to dealer finance as a facilitator of sales in recent weeks can pay long-term dividends, stating: “In late September, Moneyfacts reported that ‘since April getting accepted for a personal loan has become significantly harder’.

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“Since June, at Mann Island, we have written record volumes of finance, primarily in the used vehicle sector. There has been a healthy trend by dealers to use finance as a marketing and closing tool with competitive rates being offered; the net result has been a significant increase in used car finance volumes.”

Hughes is clear that the message of finance availability and competitive pricing can represent an essential building block to the future used car retailing model. It is a move that is being helped by what Hughes views as a healthy increase in chassis prices driven by high buyer demand and limited supply as he concludes:

“Higher prices for cars have broadly been offset in monthly cost terms for consumers by the lower APRs dealers have typically been using in their promotional activity. As a result, finance penetration has been rising with dealers earning a little from a broader pool of customers. It is an approach that works for all parties in the short and long term as we approach FCA changes for motor finance.

“On 28 January, a new regime for finance pricing and a more stringent regime of commission disclosure will commence. The trends we have seen over recent weeks provide a positive illustration of how the post-January 28 car retail landscape could look.

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“I, for one, am positive that the message of finance availability, competitive, transparent car and finance pricing, along with fair treatment can serve the sector well thus increasing customer trust, enhancing retention with lower acquisition costs and establishing a lasting role for finance as a profit centre.”

In August this year, Mann Island reported that it had seen two successive record-breaking months in finance volumes, driven by reports of a bounce-back in used cars and a level of pent-up demand.

Andy Muir, head of sales at Mann Island, said: “As a business, we took the lockdown period as an opportunity to step up level of dealer and customer engagement, remaining prominent in support and guiding the dealer network and in helping customers facing financial challenges.”