ABM Q4 - Flipbook - Page 34
Q& A
ALPHERA FINANCIAL SERVICES UK
We have great tools available for them,
which can be accessed via our dedicated
Partner Hub, including sector guides
and training materials. We’re also very
flexible in being able to tailor campaigns
according to their stock requirements.
What proportion of the
business is new car
financing, and has this
changed in recent years?
Our business performance is broadly
aligned with the wider UK automotive
retail market, in that the ratio of used
vehicle sales to new vehicle sales is
about 4:1.
Petrol and diesel models still dominate
in the used sector, representing nearly
nine out of 10 transactions, though used
electric vehicle (EV) sales are increasing
all the time and will continue to do so.
New car growth is heavily driven
by corporate and fleet demand,
whereas used sales are mostly private
retail buyers.
Are you seeing demand for
direct-to-consumer (D2C)
financing?
Yes, we see growing demand for D2C
vehicle financing through digital banking
platforms and other online channels,
though it’s worth saying dealership pointof-sale finance – the sort offered by
ALPHERA – still commands the majority
share of the market.
We’ve identified two key reasons for
the rise in popularity of D2C.
First, we know car buyers can feel
nervous about the financial element of
the purchase. To mitigate that, some are
using online finance providers to get a
guaranteed loan amount and interest
rate before stepping foot on a vehicle
forecourt.
Second, there is a segment of UK
employees who are self-employed, or
work in the gig economy.
They can have more complex credit
histories, which can sometimes result
in rejection for standard automotive
finance, and so online providers with a
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Q4
huge diversity of products can meet their
personal needs more easily.
We believe there is a place for both
retailer financing and D2C products in
the market, as each appeals different
types of customers. The main thing is
getting drivers into newer cars to support
their mobility needs, and using finance
products which work for them.
What impact has the
transition to EVs had on your
business model?
There has been no significant impact on
ALPHERA, but we know it’s coming. That’s
because the vast majority of vehicle
supply on EVs is, at the moment, in the
new car sector.
However, this will change as these
vehicles become used car propositions in
the next year or two.
What we have seen is a noticeable
impact on used petrol and diesel
vehicles: values have fallen because of
the offers being launched and actively
promoted by the OEMs on new internal
combustion (ICE) models. This has
inevitably led to a drop in used values.
Also, we are seeing a fall from the
artificially high Covid-19 period, where a
lack of new car supply stimulated used
car values. They are now beginning to
return to their pre-Covid norm.
How do you see consumer
demands changing going
forward?
The big change is going to be relating to
EVs. As they become more understood
by drivers, and they see how readily
they can fit into their driving lives, their
anxieties around topics such as range
and where to charge will be mitigated.
The new EVs of today will become the
used EVs of tomorrow, and there will be a
clear opportunity for ALPHERA to develop
this as a revenue stream.
We have already started working with
our partners to help them understand the
EV market – for example, we created a
used EV guide for them – to prepare for
what’s coming.
