Ollie Flegg looks at three key industry trends to see how they might influence customers’ attitudes towards motor finance - and where the sector could turn that to its advantage.

1) Every major development in today’s automotive industry brings with it a need for personalised customer experience.

Within the automotive industry, before you consider the impact of the pandemic, there were four major developments demanding attention – autonomous vehicles, connected vehicles, electric vehicles and shared mobility. The closure of dealerships through the pandemic makes it clear that online vehicle sales has become established as a strong fifth development, as sections of the industry have moved to digitise the end to end customer experience.

Arguably, shared mobility will have the biggest impact on the relationship between manufacturers, dealers and the customer and therefore how vehicles are financed.

You might not own a vehicle at all, but instead have a contract to drive one for a certain amount of time each month, or even have a finance deal that wraps car rental, train and travel packages all together. The introduction of autonomous vehicles will accelerate how we look at the experience of using a vehicle as the driving experience will matter less and the customer experience more.

Your relationship with your vehicle(s), the manufacturer and the brand will increasingly become about the service you receive rather than how the vehicle drives. How well have your preferences been integrated into the vehicle, what you can do while you’re there, what else might you therefore be prepared to pay for and how well has the experience been personalised to you?

Coronavirus and the resulting impact on industries around the world, may well be the catalyst to move towards more shared ownership as commuting and personal travel have changed. As uptake begins to grow then the industry needs to be ready for digital-minded customers who want flexibility, personalisation, speed and autonomy. Motor finance will also need to adapt to remain relevant to how customers wish to fund their travel. A pioneering example is the ŠKODA Virtual Showroom but motor finance needs to get onboard with a new customer journey and embrace digital opportunities.

2) Customers going direct to the manufacturer and doing so digitally. 

Currently you don’t buy a car from a manufacturer, you buy it from a franchise dealer network. But in the future you are much more likely to complete the full purchase of a car online, so why not buy directly from the manufacturer?

Everything will be driven to become more digital – a process already underway - and the franchise network will need to adapt and adopt those methodologies or risk being left out. Franchise dealer networks have the relationship with the customer, which is powerful, and if they embrace how their customers want to be more digital they are well-placed to maintain those relationships. In our article ‘When trading resumes what can motor finance do to win over the new breed of digital consumers?’ we take a look at how the pandemic has changed expectations of digital consumers.

Take one example, booking a test drive. Presently, in the majority of cases, a potential buyer can go online to book a test drive with a manufacturer. You make your selection and you’ve booked your test. Except it’s not that easy. What happens instead is that someone from a dealership will phone and say, what are you looking for, can you come in and see what they have, and would you like something else instead?

So you’re in this situation where customers believe they’ve booked a test drive, but they haven’t. It’s a digital pretence, and emerging customers, particularly those under 25 raised on e-commerce, simply will not stand for that disconnected level of service.

If the dealerships invested in digital service channels that embraced customers online rather than coaxing them into the physicality of a dealership, they would maintain their relationships with customers and prevent customers trying to cut them out.

Much of the average car customer’s buying journey already starts online: doing the research, checking spec and prices, looking at a YouTube video to see if anyone’s reviewed the car they are interested in… Car buying is already on the way to becoming another digital first journey, and this could be a promising change for the Motor Finance sector.

If motor finance moves the buying process online and transforms their role into a more significant part of that experience, then it becomes the missing piece that takes a customer all the way from first researching their new car, to having it delivered to their door.

3) Under-25s are looking for a new model of ownership. Motor finance could win the race for this audience.

The under-25 audience is much more attuned to the environmental impact cars have, from electric vehicles, to autonomous vehicles and to shared mobility. The benefits from each of those will be looked on favourably by this generation, an attitude only encouraged by government policy around taxation, emissions and financial incentives.

But it’s also a generation familiar with the idea of renting – because the cost of house ownership is beyond them – and to having a phone contract or getting their music and entertainment via a subscription. That’s the model they will gravitate towards.

So unsurprisingly they will be the frontrunners in a new way of thinking along the lines of “I’m not going to bother owning a car because I don’t need one that much. I’ll ‘subscribe’ to one instead”. After all, cars on average spend more than 90% of their time parked, which is an incredibly inefficient way to own anything! This is the generation more likely to look for an agreement securing 150 hours a month of car use, with a suitable vehicle always available in the local depot, a short walk from where they live.

This gives motor finance an exciting opportunity, and one where it can learn from other industries, such as mobile providers, on how to offer a new type of flexibility. It could take on a different role and spearhead a new model of helping people to ‘buy’ cars. With the right innovation, the sector could be a driver for change throughout the wider automotive industry.

Thinking about your organisation?