Wednesday 16th Mar 2016
Finance has played an important part in motor retail since 1919, when General Motors (GM) was the first Original Equipment Manufacturer (OEM) to establish a non-bank financing source for automobile loans to support their car sales.
Fast-forward to today, and figures from the Finance & Leasing Association (FLA), show point-of-sale consumer new car finance was up 10% by volume and 16% by value in September. The percentage of private new car sales financed was 79.6% in the twelve months to September 2015 – another record high.
Despite finance playing a key role in motor retail, the use of finance in the marketing mix has remained static for many years. The motor industry hasn’t followed the high street, and retailers of other big ticket items, such as furniture or jewellery, where finance is used to both attract shoppers and improve conversion rates.
Consumers expectations are changing. A recent study from Google tells us that today’s car buyer is more promiscuous than ever before with 72 per cent searching across manufacturers and retailers. They are also researching more, turning to an average of 24 information sources. Finance has a key role to play in capturing a promiscuous shopper and driving post-purchase loyalty.
Both dealers and manufacturers must grab a consumer’s attention, and partner them on their journey through the car buying process. This means providing up to date, accurate and fast access to finance to enable buyers to make informed decisions. A promotional finance offer will help to connect buyers to your brand and onto the forecourt.
2016 is set to be a breakthrough year for the motor industry as it adopts a new approach to finance products, creating innovative ways for retailers to market new and used vehicles.
Mobile usage has increased 35 per cent year-on-year, with a focus on research and comparison activities. The ability to deliver a finance quote and acceptance in this environment will deliver a market advantage and Hitachi is working with its customers to provide finance at the speed of the customer.
The time has come for finance to play a more active role in motor retail and follow that some of the familiar funding concepts from the High Street – such as zero interest and deferred payments. The ability to offer ‘buy now pay later’ finance on used product is already proving an effective promotional tool for our dealers.
Consumers expect to be able to research and transact at home, on mobile and in the dealership, and it’s time for finance products to evolve to offer car buyers the same deals they expect in many other retail sectors.
Lisa Harrison is Head of Business Development at Hitachi Capital Motor Finance.