Published in the January 2020 edition of Auto Retail Profit.
Author: Matthew Briggs, Group CEO
2020 is set to see significant changes in motor retailing. This theme of change will not be new and nor is it unique to motor retailing. What matters is how the sector chooses to react.
Having been involved in a range of business sectors over the last decade, including the automotive sector, the common theme that has driven success, often against a tough trading backdrop, has been the importance of embracing a progressive, growth mindset. Across the AutoProtect Group, we are ready to help the motor retail community to embrace this approach. This is true in our new Group structure, our products and services, but most importantly in our people.
Progressing F&I in 2020
Over 90 percent of new car retail customers choose dealer finance. In volume terms that is around a million cars. The used car market is some seven million cars and yet finance penetration here falls to around an estimated 25 – 40 percent. When it comes to added-value products, the ‘product per customer’ take up, to use a metric from my time in insurance, is something that is in limited use. Looking at the total added-value product market, there is plenty of headroom for growth by meeting customers’ needs.
The opportunity in 2020, afforded by regulation is to increase used car finance penetration and to start focussing upon added value products per customer. Achieve this in a highly compliant manner, focused upon delivering good customer outcomes consistently and motor retailers can progress in multiple ways, notably:
• Profitability – by increasing finance penetration and earning a fair and transparent commission from them;
• Reputationally – by delighting customers who will be prepared to recommend a dealer they trust. Happily, this ethos will also support compliance;
• Enhanced lifetime value and retention.
People, Processes/Products & Technology
These are what I see as the three tools to achieve progression.
1. People – internally and externally none of us can work with too many smart, forward-looking people. A broad collective team that combines; strategic thinking, market/customer insight, teamwork and a capacity to work towards a common shared goal is critical. Collaboration is crucial, never underestimate the people who work in businesses as suppliers or even customers who will help given the opportunity.
2. Processes/Products – How you sell a product is every bit as important as the product itself. Having led a well-respected outsourcing business, we were selling our capacity to live the passion and energy of our clients’ brands. Regardless of their products, we were selling a promise of outstanding service. We understood that experience and service were often at least as important as the product and that this has a £££ value. Commonly car buyers are purchasing more than a car; they want a relationship and support from businesses they trust – the ‘how’ matters and in a progressive business monetizing this value is crucial.
3. Technology – smarter technology is essential, but always remember to embed your businesses personality and broader proposition into it. Digitisation of car retailing will increase and it can and should see F&I services digitised within it. Customers will benefit from control and transparency; dealers will benefit from speed, lower costs and for regulated services greater compliance.
2020 Time for a Progressive Mentality
At AutoProtect Group, we have approached the year with a progressive mindset. Our businesses; AutoProtect, Shine Repairs and DealTrak now sit alongside one another in a symbiotic relationship designed to deliver best in class options to our growing client base.
At the heart of our ethos are our people. I said earlier you can never have enough smart people; pooling our talent pool internally and externally and in a genuinely collaborative spirit is helping us to develop our products/processes and technology even faster.
If you want to progress in 2020, we’d love to collaborate with you.