WHEN I’m speaking to small business owners about car leasing I often liken it your mobile phone contract.
It’s a monthly fee that you pay to rent a phone and airtime.
Car leasing is pretty much the same. You pay monthly rentals for a car over a certain amount of time and mileage.
Come the end of the contract upgrade and roll again.
But in a week when Volvo announced that “having a new XC40 will be as hassle-free as having a mobile phone”, it has become closer than I had envisaged, according to Sophus3 md Scott Gairns, whom I met at their London HQ recently.
Their latest research identifies that an Apple (iPhoneX) now costs more than a car (Suzuki Celerio). No, really. A car for less than the price of a phone.
Such a benchmark was the basis of a presentation Scott was making today at the Automotive Finance Forum in Paris (September 28).
Scott was presenting Sophus3’s white paper on the ‘Digitalisation of Automotive Finance’ and an audit of auto brands’ websites that indicates a huge gap between consumer uptake of finance packages and consumer awareness and engagement online.
Scott commented: “Mobile has converged with mobility. This new benchmark in car finance is fuelled by increasingly competitive monthly finance rates, from a growing list of rival finance providers, and the challenge to hit year-end sales targets. I would not be surprised to see more cars offered on payment terms below that of mobiles before the end of the year.
If you’re a business click here to read What is contract hire?
“In principle, this isn’t necessarily a bad thing. Cars will anyway become part of a monthly mobility model within the unstoppable digital transformation of automotive retail. And at less than £100 per month even more car-buyers will be tempted to buy digitally. But are the car brands ready to engage and transact online with customers in the style of a Vodafone or a Carphone Warehouse?”
The research from Sophus3 shows that most auto brands lose business online because buyers are confused or don’t completely understand their commitments.
It seems to me little doubt that small businesses and consumer car buyers are heading towards leasing brokers, rather than the auto makers, where the proposition and the ability to buy online is simple. Leasing brokers such as:
- Nationwide Vehicle Contracts;
- Intelligent Car Leasing;
- Vanarama; and
are prime examples of this. There are plenty more, of course, typically members of the Leasing Broker Federation.
I have no doubt that leasing brokers are behind the huge expansion of leasing, particularly personal contract hire (PCH). While leasing has continued to grow, the real driver is PCH which saw a 36% growth year on year.
So I’ll be interested to listen to what Scott has to say at the Leasing Broker Conference on November 23 that we are organising, where he’ll be discussing the digitisation of automotive finance with leasing brokers – see Scott Gairns announced for Leasing Broker Conference.
In the meantime, here are some interesting facts unearthed by Scott and his Sophus3 team:
- 8 out of 10 cars are now sold using finance
- 2 car brands are considered by each car buyer on average, up from 2.5 in 2010
- just one in one hundred visits to an automotive website leads to a sale
- less than 0.1% of visits to automotive websites actually produces a test-drive
- just 17% of online shoppers return to a brand’s site after having visited a rival
So will your next car be leased? Given the access to such brilliant deals – I saw a Honda CR-V for £160 a month! – and the fact you can access a car cheaper than a phone, I suspect the answer is yes.
Wouldn’t you agree?