2015 PCP Car Finance Outlook

Influence of Personal contract purchases (PCP’s) in the used car market is expected to grow in this year. Retail loans in this sector are projected to be on the rise. PCP’s carried the new car market during the recession and continue to dominate the industry in an average economy. Latest survey of motor finance executives is encouraging for dealers as it suggests some growth in demand for loans from buyers of new and used cars. In 2014 consumer used car finance grew by huge margins. More dealers will focus on ensuring that their offers will attract consumer interest. Dealers’ stock profile will have to be right, and the product will have to be strong and flexible enough. How the dealers target their sales departments and manage their stocks is going to impact the used car PCP’s. With proper research and preparation, PCP deals can provide attractive offers to consumers for used cars up to five years old.

Dealers will be aiming to get retention benefits. As well as targeting campaigns to a consumer dealers are encouraged work with a finance provider to come up with attractive marketing offers for their customers.flexibility of finance terms is what draws customers. The terms provided by PCP’s are flexible enough to suit each consumer’s interest. People further down the chain are expected to move up to newer cars on PCP. Used car finance rates should be lowered, and shorter term plans are advised on as PCP is now growing in the used car market. Dealers are looking for better ways of engaging with their customers.

Used car finance is lagging behind new, but this could change if dealers widen their approach to promoting finance. Enough information should be provided to customers so that they can make informed decisions. Most manufacturers are expected to focus their efforts on renewing new car PCP’s. A short supply of ex-demos and courtesy cars is also projected. Short-term fleet deals and company cars will fuel demand in the used segment. Customers will still consider used cars, often when taken onto sites by new-car PCP deals. Finance companies will have to broaden the qualification criteria so that any car can be funded through PCP.
Increased reliability coupled with manufacturers’ strong hold on new cars is encouraging companies to offer PCP finance on older stock. From the dealers’ perspective, this has negative implications since nearly new and old cars become less attractive to customers. Treating customers fairly, training and provision of information will encourage the growth of the market. Dealers need to realize new opportunities arising and update themselves on the use of technology as a marketing tool.

Need for the UK to absorb European production will stimulate further PCP’s that are already encouraging people to change cars more frequently. Used car PCP’s are becoming more fluent and cost effective thus bringing customers of older cars into newer cars.This is going to lower the values of used cars. Used car PCP is expected to rise in the next twelve months. Dealers should try to bring buyers back to the market earlier than the end of the lease period. The market will be significantly affected by increased volumes of used cars. There is a massive increase in PCP penetration where online finance tools are provided through digital channels. Customers are being given the chance to sample different finance products.

Some lenders are adopting their own interpretation of FCA compliance policies,and this is making it so difficult for dealers to manage multiple funder relationships. Demand for simplified funder policy is on the rise. The introduction of more robust documented sales processes will help customers make informed decisions. By having a greater understanding of dealerships requirements, the motor finance provider can help their client operate more efficiently in improving performance and results. Increased levels of customer satisfaction are expected to increase used car finance penetration. Dealers who fail to gain authorization will only be able to sell vehicles for cash and offer non-regulated warranties. Those dealers who have FCA authorization will be at a better position. Customers who buy from a dealer who has passed the FCA criteria will be able to make a purchase using the full suite of facilities that the lower league dealer can now no longer offer.