The evolution of the automobile is an opportunity for dealers
Rebecca Duckworth explores how new technologies can enable the auto finance industry to create new business models and seize new revenue opportunities
The decline in in-person business during the lockdown added an additional dimension of urgency to a shift in the auto market that had started long before the pandemic struck. COVID-19 has accelerated the shift to online shopping, as the rise of new leasing models drives the transition from ownership to user. Dealers know they must adapt if they are to survive and thrive in this rapidly changing market. Fortunately, developments in the automotive industry, particularly in financing, offer dealers a unique opportunity. They just need to grab it.
Our industry faces a crossroads, brought closer by the experience of the pandemic. Dealers must adapt to the new normal; to do this, they must harness the power of digital technology to support new rental structures.
The rise of Fleeail and PCH
Big events can act as a catalyst for change. Just look at how the credit crunch led to a boom in Personal Contract Purchasing (PCP), giving people access to vehicles they could never have purchased directly while cutting monthly expenses compared to for traditional hire purchase.
Likewise, the pandemic has stimulated interest in leasing in general, and personal contract leasing (PCH) in particular. PCH is perfect for a new generation who doesn’t want the burden of owning a vehicle, but still wants to drive the latest and greatest models. This new leasing structure brings much more simplicity: without the possibility of owning it at the end of the lease, customers know that they only have to pay the rent and the VAT, stick to the agreed mileage, and they can return it with reasonable wear and tear. .
From the advent of electric vehicles to the rise of PCH and Fleetail, the way consumers buy vehicles is undergoing its biggest upheaval in generations.
With PCH, customers benefit from the improved clarity, coverage and flexibility of use rather than ownership. Leasing offers them the perfect way to access vehicles without significant up-front costs or worrying about periodic maintenance, while giving them more independence, allowing them to take advantage of a wide variety of rental offers. ‘a range of manufacturers or funders.
PCH is also supporting a related development that is transforming the role of dealers: the merger of fleet and retail (fleetail). It is ideally suited to the abandonment of company cars by companies and instead provides employees with extra salary to spend on the vehicles. Plus, that means a constant supply of cars coming back to the dealership, which is especially important given the shortage of new vehicles caused by the global shortage of microchips.
Dealers can take advantage of this new opportunity in two ways. First, they can optimize their brokerage channel, since almost all dealers who currently offer PCH do so through brokers. Or they can become a disruptor and take on the role of a full-fledged brokerage or leasing company.
Dealers should remember that they have a huge advantage in this market. They already maintain vehicles throughout their existing contracts and have many points of contact with customers. They know where the customer bought the vehicle from and how it is financed, whether the customer pays for the maintenance themselves or if they are covered by a maintenance package, and when the financing needs to be renewed. With this information, they can get permission from the client to contact them as the renewal date approaches and sell their leasing products to them before the broker or leasing company begins their renewal process. .
This evolution can be accomplished in two ways: by developing stronger relationships and sales channels with the broker market, or by creating their own leasing or brokerage companies, or both. Whichever route they choose, success depends on dealerships harnessing the power of the latest technology to connect everyone in the chain.
Take the chance
To be competitive and provide the exceptional service customers expect, dealers need to update their CRM and back-office systems and move to a unified platform that connects the dots to each other, financiers and the broker channel. , or facilitate their evolution into brokers themselves.
The evolution of the automotive industry, especially in financing, offers dealers a unique opportunity
Dealers can now take advantage of a new generation of digital platforms designed for the automotive market that bring the industry together in a unified, fully digital platform. Access to a ‘one-stop-shop’ allows dealers to source vehicles from a giant network across the country, while customers can choose the vehicle they like – and financing for that. here – while maintaining the individual relationship with their local dealer.
The benefits don’t end there. The use of digital information systems allows new market entrants to set up their own brokerage houses without having to become an affiliate, pay AR fees, or work with low-end marketing websites to facilitate the transactions. And perhaps more importantly, choosing the right information system (IS) helps close the regulatory loop, ensuring that every communication, contract or other document is handled in a fully compliant manner within the system.
From the advent of electric vehicles to the rise of PCH and Fleetail, the way consumers buy vehicles is undergoing its biggest upheaval in generations. A number of companies, including QV Systems, are helping the industry move away from legacy systems that hamper the ability of dealerships to scale and stay relevant to their customers. The key is to seize the opportunity offered by COVID and to sustain the dealers by supporting new and better relationships with the broker channel on the basis of strong digital foundations.
About the Author: Rebecca Duckworth is Chief Sales Officer at QV Systems