The used car market is set to become an even more challenging environment in 2019, but there are ways for dealers to sustain sales and the bottom-line. This is the view from Karl Werner, Deputy CEO of MotoNovo Finance, the business behind findandfundmycar.com, assessing the market one month into the new year.
He said: “Looking at current market conditions; the continuing emergence of market disruptors and what now looks set to be ongoing political jousting, dealers should prepare themselves for what looks set to be an even more challenging market. In challenges there are threats – but also opportunities – and we believe dealers can take advantage of these in the year ahead.”
In 2018, new car sales declined to pre-2008 levels while in unit terms, used car sales in Q3 reflected a year-on-year decline in volumes of 2.4 percent. Where real success did occur was in the finance space. Used vehicle finance saw encouraging growth last year, and figures from the Finance & Leasing Association (FLA) show the number of used cars sold on dealer finance in the 12 months to November rising 7% to 1,454,568 while their value surged 13% to £17.5bn.
In the same year, dealers working with findandfundmycar.com saw a 13.5% uplift in finance volumes compared to the previous year, as the platform delivered a total of 55,000 finance proposals for its supporting dealers.
Karl Werner added: “It’s long been the view of the team here at MotoNovo Finance that dealer finance can play a hugely significant role in used car sales. This is why our findandfundmycar.com proposition is so unique; it is the only major car sales aggregator that does not offer or advertise finance that competes with the dealer, instead it promotes dealer finance itself.”
A year on from the launch of findandfundmycar.com, over 2,600 dealers are now offering more than 137,000 cars on the platform and the site has expanded to include LCVs and bikes. With this scale of engagement, MotoNovo is well positioned to gain feedback on the key challenges facing the dealer community. The key concern from the trade is that margins could become squeezed as a result of shortages of quality stock, high stock prices, flattening retail prices, and competition fuelled by the rise in digital channels.
As well as the competitive issues, Werner encourages dealers to be prepared for the continuing impact of broader macro-economic factors affecting the market, including emissions regulations continuing to effect product supply, the emergence of Ultra Low Emission Zones (ULEZs) impacting older used stock and residual value setting, the outcome of the FCA review of motor finance, the continuing impact of Brexit on consumer sentiment and the economy, and increasing competition for car sales and customer data.
He added: “Gaining sales and profit in the year ahead will become increasingly demanding and I encourage dealers to rise to the challenge and change the way they operate. Given the pace of change and resources available, dealers should look at who they can collaborate with to maximise their joint skills and meet the changing demands of today’s car buyers.”