Easier car finance could contribute an additional £9.6bn to the UK automotive industry
A new study has found that easier car finance processes and improved financial management technology could help inject an additional £9.6 billion to the UK’s automotive industry. The study, from financial technology company Intelligent Environments, uses data from an online survey of 2,000 UK consumers, as well as the Office for National Statistics and the Society of Motor Manufacturers and Traders, to determine the potential cash injection for the automotive industry.
Almost two thirds of Brits (63 per cent) said buying a car is difficult, and 61 per cent said that finance is one of the most challenging aspects to buying a new car. The study also found that one of the factors that puts people off taking out finance to buy their car is that they have to deal with their local dealership. 63 per cent said they don’t trust their dealership to manage their car finance properly, and 49 per cent said they would like to have a closer relationship with their car manufacturer after buying their car, a relationship that currently ends after the point of purchase.
Engagement by car finance companies is typically limited to sending out an annual statement. Digital solutions can be much more attractive for customers who are used to initiating their car purchase research online, and savings can be made by reducing paper sent out via post.
The scale of the opportunity for manufacturers is sizeable. There were 2.47 million car sales registered in the UK in 2014, and in 2015 to date 46.3 per cent of these have been private sales to consumers with an average price tag of £27,219. The total amount currently spent, assuming these figures remain consistent, is £31 billion. However, making it easier to buy cars could almost double how often people do it, from the current average of 6.3 years to 3.5 years, and 39 per cent said they would change their car more often if car finance were easier to manage. Therefore making car finance easier to manage could grow private car sales by £9.6 billion to £40.7 billion.
To help car manufacturers seize this major economic opportunity, Intelligent Environments has enhanced its Interact® product specifically to help automotive manufacturers forge closer, simpler and better relationships with their customers.
David Webber, managing director of Intelligent Environments, said: “Our study reveals the scale of the opportunity automotive manufacturers are missing out on. Simpler car finance can help the UK car industry make an additional £9.6bn. Not only that, but our figures show that current car finance practices are actively holding people back from purchasing more cars, and half say they want a closer relationship with the provider of their car finance and the manufacturer.
“There’s a great opportunity here. Currently, manufacturers’ relationship with their customers ends at the point when the car is purchased, as they then hand over the customer relationship to the local dealership. By providing the financial management directly, manufacturers can extend their relationship with customers across the entire length of ownership. As cars become smarter, more complex and increasingly sophisticated, a closer, better and simpler relationship with the manufacturer will become increasingly important to consumers. This technology will help take the first step.”