Findings from Car Dealer Magazine’s Top 100 Dealers, including independent and franchised dealers was a reflection of 2021 as a boom year for UK car dealers. The reported £1.65bn figure in earnings before interest, taxes, depreciation and amortisation (EBITDA), represents a 41% increase on the previous year’s results and was supported by unprecedented used car prices that were driven by high demand and a lack of new vehicle supply. Given the current uncertainty in the market, many are asking whether this strong performance will continue for dealerships.
Cap HPI, experts in risk and profit management in the auto sector, report two trends that indicate the looming changes awaiting.
While these market changes aren’t dramatic, a slow recovery means that dealers, rental companies and SMEs with fleets should be considering how to future-proof their business to capitalise when these changes take effect. The fate of mobile phone provider Nokia is a pertinent example of the impact of overlooking consumer change despite achieving comfortable sales and profit position. By ignoring changes in consumer behaviour as mobile phone users began to gravitate towards new Android platform software, Nokia began innovating too late and effectively were outsold by its competitors who acted early on these trends.
There is an assumption that customers within the car market are hesitant to change brands due to the belief that dealerships prioritise and reward loyalty through finance deals and warranties. However, recent behaviour change has pivoted from ownership to usership, whereby motorists are reshifting their preferences towards affordability and flexibility. When it comes to getting on the road, modern motorists are no longer attracted to the large financial commitment associated with a depreciating asset. Rather, motorists are now valuing:
This has coincided with the rise of bundled car subscription offerings that have been tailored to cater to the demands of modern motorists. These subscription plans are all-inclusive, meaning that subscribers are able to drive with a peace of mind knowing that costly and necessary items such as insurance, registration, servicing and maintenance are all covered by the car subscription provider. The demands of modern motorists extend further than these inclusive offerings, with a digital onboarding and booking experience becoming a prerequisite for many as more automotive incumbents deliver their own innovative solutions. For car subscription providers, particularly those new to the market and lack existing networks, the ability to deliver a digital-first experience can be a challenge - both financially and technologically.
As a technology partner, Loopit ensures that all car subscription providers are equipped with the solutions necessary for success. Our turnkey solution makes it easy for businesses to integrate car subscription services into existing sales and finance strategies - all without having to rely on multiple third party tools. By offering a suite of solutions that are cohesively integrated into the operations of a car subscription, businesses can quickly launch their car subscription service while meeting the digital demands of their customers. These solutions include:
Taking advantage of Loopit’s all-in-one solution will mean businesses can go-to-market efficiently and begin yielding the long-term benefits of car subscription. For dealers and rental companies, this translates to a new stream of recurring revenue and the ability to unlock new customer segments. Interested in launching your own car subscription service? Get started today: https://www.loopit.co/get-started
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