More than 1,000 dealers have signed up to MotoNovo’s risk-based pricing model MotoRate, within the first 50 days of launching in June.

On 28 July, the Financial Conduct Authority (FCA) confirmed a ban on the use of discretionary commission models from January 2021, specifically referencing “moving to risk-based pricing” as a commission model that fits within its requirements.

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Mark Standish, chief executive of MotoNovo, said: “The response by dealers to MotoRate has been very encouraging. Dealers have welcomed the way in which MotoRate embraces the spirit and letter of the FCA’s Policy Statement.

“They certainly like the impact it is having on their businesses and how they can compete with personal loans on price and transparency. An overall 40 per cent growth in finance penetration is a very powerful reason for switching and this is exactly what we have seen.”

Last month, MotoNovo warned that lessons learnt during the lockdown period must not be lost, particularly the digitisation of used car retailing.

Standish said: ““The way forward is developing an omnichannel proposition that gives customers the option of how to buy their next car; online, offline or very possibly through a combination of each. It is a model that Cazoo has embraced as evidenced by its acquisition of Imperial Car Supermarket.

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“The fact that Cazoo has sourced circa £200m in investment to address the capital cost of setting up the business infrastructure and brand building says much for the resources needed for success in used car retailing.

“For established dealers, I am struck by the potential for collaboration in today’s dynamic operating environment, especially amongst the small to mid-size independents. There are opportunities for this group to come together in ‘co-opetition’ and where it makes sense in a co-operative spirit to ensure they have the scale and digital presence to compete effectively. Distribution, finance, marketing, stocking, CRM and innovation are all areas where opportunities for collaboration are evident.