03 December 2020

PARTNER FEATURE

Finance sales from dealer switching to the MotoRate pricing model show year-on-year growth of over 70%

Approaching 2,000 dealers are now live on MotoNovo’s innovative MotoRate risk-based pricing, model designed to meet the Financial Conduct Authority (FCA) changes to motor finance. I’m proud and excited to see the impact the MotoRate model has had on their used vehicle finance performance; it has been exceptional. I believe it represents an exciting new best practice.

Finance sales from dealers switching to MotoRate have increased by over 70% year-on-year consistently over recent months.

Finance growth

While we recognise that the used car market has performed well since initial lock-down measures were eased, we can be confident that used car finance growth of over 70% represents a very significant improvement in used car finance performance. The dealers who have switched to MotoRate are demonstrating just what is possible with a fresh new, FCA compliant pricing models and are tapping into a significant opportunity.

In 2019, the Society of Motor Manufacturers and Traders (SMMT) reported that there were 7.9 million used cars bought in the UK and a little over a million new cars purchased by private buyers. However, where new car finance penetration of retail sales in 2019 was 91.7%, according to the Finance and Leasing Association, used car penetration performed in the 20 – 40% penetration range typically. This penetration range has been a long-term trend with some outliers, above this level, but plenty more operate below it.

The data on car sales and new car finance data crystallises the available opportunity gap that exists in used car financing. Even accepting that not all used sales go through the dealer channel, we are talking about the potential to gain many thousands of incremental used car and van finance sales. Where dealers can be encouraged, with MotoRate, we are demonstrably helping dealers to start realising this opportunity with a financing approach that delivers good outcomes for customer and dealers alike.

Promoting competitive rates

The considerable improvement shown by dealers using MotoRate is due to the way in which MotoRate works. It enables dealers to advertise and promote more competitive and relevant rates to customers driving enquiries to the dealership. This promotional offer is then coupled with a highly efficient showroom and/or online customer journey from quotation to acceptance, turning the enquiry interest into cars sold. Everything is highly transparent.

In addition, it has been evident that the vast majority of dealers are eager to embrace the changes the FCA are seeking and the success of MotoRate is due in no small part to the proactivity and engagement of the dealers that have bought into its ethos and operating processes. MotoRate is dealer proven; it works very evidently.

By Karl Werner, deputy CEO, MotoNovo Finance

Tags: MotoNovo, MotoNovo Finance, partner feature