Wednesday 16th Mar 2016
The motor industry is set for a shake up as a new approach to finance products creates innovative ways for dealers to market new and used vehicles.
Hitachi Capital Motor Finance is rolling out a new range of promotional finance products that have already seen dealers boost sales by over 11% per cent.
The new products bring Hitachi’s 30 years of retail know-how to the motor industry. The company processes over 1m loans a year (one every 30 secs), across all channels, and has built a business that writes over£1.6bn per annum through product innovation that help its customers build sales and their brand.
Working closely with dealers, Hitachi has developed a range of promotional finance products including; interest free, interest bearing credit, countdown interest bearing credit commonly known as “Buy Now Pay Later” and countdown interest free credit, providing maximum flexibility and a powerful platform for marketing activity.
The products are available on purchases priced between £2,000 and £25,000, providing competitive, sustainable pricing with no hidden fees. This, combined with Hitachi’s processing speed -over 90% of decisions are instant - and UK based sales support team, has seen over 90% of our dealers already adopting the model.
Hitachi argues that APR based models are simpler to administer, fairer to the customer and are more profitable to dealers than traditional commission structures.
Lisa Harrison, Head of Business Development at Hitachi Capital Motor Finance said: “As the issue of commission and placing business based on finance earnings, comes under increasing scrutiny, there’s an opportunity for dealers to adopt the retail model and increase profit.
Our research shows that an average dealer is missing out on additional revenue of £26,031 a year per site, simply by continuing to use a DIC commission structure, rather than adopting an APR based model. So there’s a clear commercial case to bring these solutions to the motor industry, and our early trials have demonstrated this can drive additional sales.”
A proven model
Gary Couzens, Director at John Peat motors, believes a clear and transparent finance offer is essential to his business. An APR led finance product, with no fees, enables his team to build customer loyalty, and meet FCA requirements.
"We put finance at the heart of our business. It has helped drive sales and finance penetration of 70-80%. We are using a ‘buy now, pay next year’ offer in our current advertising, and it is bringing the customers in.” says Gary. “The speed of loan application and acceptance is excellent and is helpful in closing the deal."
John Peat Motors has operated since 1979, and has grown to become a busy internet focused retailer. It allows customers to apply for finance online, which means they arrive at its site in Sleaford with a clear idea of what car they wish to buy, and how much it will cost them. This has boosted both conversion and customer satisfaction rates.
A different approach
Unlike most other providers, Hitachi Capital underwrites the individual, not the asset, giving dealers the freedom to do what they do best, sell cars.
It also looked at all the issues that affect the sales process and changed the rules, making it easier to close a sale and sell both new and used stock. This started with a flexible approach on LTV, up to 200%, and on the age of vehicle, allowing dealers to shape deals around the customer and address any issues around negative equity.
Hitachi’s standalone system lets dealership staff take a customer through a finance application online, in under three minutes, with an instant decision on completion. The service integrates seamlessly with existing dealer management systems (DMS) to process finance applications.
Hitachi was one of the first to introduce electronic processing and e-signature. This fast online application method eradicates the need for a traditional 'wet' signature, meaning deals can be signed off with the customer immediately.
Savvy consumers are able to access both vehicle pricing and finance data at the touch of their mobile. It is vital that dealers support their sales effort with a finance partner that can move at the speed of today’s retail environment.