The new 2023 plate change will come in a volatile, ultra-competitive market. Here’s how to win over those harder-to-reach customers
Car buyers are becoming more cautious as the cost-of-living crisis continues to bite. Mobility provider SOGO researched attitudes towards personal financial commitments and car ownership, and found that almost a third of British motorists (32%) said they are far less likely to replace their existing car by committing to a long-term (three-year) lease than they were 12 months ago, an independent study has revealed.
Only 14% of drivers would be much more likely to commit to a long-term financial lease to fund their next vehicle than 12 months ago.
Car shoppers have had to deal with vehicle shortages, high prices, dwindling incentives and rising interest rates. And car firm Edmunds is not expecting this to change.
“Many buyers exited the market due to inventory issues or pricing that was not what they were expecting,” said Ivan Drury, Edmunds’ senior manager of insights. “While some of those issues are subsiding, current buyers will face a new set of challenges. The cost of financing continues to climb, which can offset some of the discounts from the manufacturer’s suggested retail price.”
The cost of personal loans continued to rise – albeit at a slower pace compared to previous months – with average rates for £10,000 personal loans nudging up to 6.02 per cent in January from 6.01 per cent a month earlier. In January 2022 rates stood at 3.94 per cent.
The amount UK drivers borrowed to pay for cars hit a new record in 2022, rising by over £4billion compared to the previous year. Despite fewer new and used car sales recorded last year and a decline in the number of finance deals being taken out, analysis of the full-year data published by the Finance and Leasing Association (FLA) shows that borrowing ballooned to £40.7billion.
That’s a 263% increase since last year.
For the last four years, more than 90% of new car buyers financed their car through dealer-sourced finance. However, that has dropped substantially to 84% mainly due to the boom in electric vehicle sales, which are often financed through salary sacrifice schemes that benefit from significant tax savings.
As EVs are only going to get more popular in coming years, we are likely to see a permanent shift into how new cars are financed.
Used car finance fared a little better. About 600,000 fewer used cars – a 9% decrease – changed hands in 2022 compared to the previous year, according to the SMMT. But the number of used car finance agreements increased by 10%. On top of that, the average amount borrowed jumped substantially.
The worry is that as household bills continue to be squeezed, customers will hold onto their cars for longer.
With customers thin on the ground (thanks to those tightened belts), our age-old advice means more now than ever before: financiers need to make the most of every customer.
APLYiD makes the loan application process – and onboarding your new customers – completely simple and straightforward. We verify your customers’ identities in seconds, confirming they are who they say they are, while automatically gathering all their personal details and pre-filling forms. This means less customers abandoning the loan application process halfway through.
It means you can have over four times as many customers as you do today. Mark Roberts, National Sales Manager, at Convera, an APLYiD customer, said: “With APLYiD we have seen 406% more accounts created due to ease of onboarding.”
To find out more about how we can help you thrive in 2023, visit us here.
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