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.
- The used car market is beginning to soften. Following successive decreases in 3-year-old vehicle valuations in April and May, June 2022 saw a plateau of Cap HPI’s prices, with both low demand and low supply in evidence.
- The cost-of-living crisis has also seen many dealers reporting it harder to close deals.
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.
Is it worth offering car subscription to my customers?
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:
- The ease of getting access to vehicles
- The flexibility to use their vehicles according to their changing needs and lifestyle
- The ability to free up their finances to help with other important financial priorities such as purchasing first home
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.
Launching a digital car subscription service with a turnkey solution
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:
- Integrated point of sale - Loopit offers en embedded point-of-sale solutions from basic enquiry forms to end-to-end booking funnels. The point of sale allows businesses to manage their inventory and subscription plans seamlessly that is consumer facing and self-serviceable.
- Online subscription booking experience - Loopit provides an omnichannel customer experience by allowing customers to book their subscription online, in person or over the phone.
- Integrated identity verification and integrated credit checks - To reduce bottlenecks in the process and convert more subscribers, Loopit allows businesses to verify their customers identity and credit score in real-time all with an entirely paperless process that only requires an upload of a driver's license or passport.
- Digital agreements - Loopit offers electronic signature functionality along with automated reminders so subscription bookings can be quickly processed and easily followed up should subscribers forget to sign an agreement.
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