Fireside Chat
Adding strings to a digital bow: MotoNovo Finance
As an industry that has historically struggled to keep up with digital trends, the pandemic has provided the springboard for an automotive leap of faith. Covid-19 has accelerated digitalisation through needs must. Motor Finance’s Hannah Wright speaks to Jon Slater, interim chief strategy and marketing officer at MotoNovo about the firm’s digital transformation across 2020.
Hannah Wright: What new processes have MotoNovo implemented as a result of Covid-19?
Jon Slater: The first and critical steps we took were to secure the well-being of our team and then to commit to helping and supporting our dealers and customers positively. We very consciously kept our ‘foot on the gas’.
Early in lockdown, we developed our existing digital servicing capabilities to deliver a digital hardship tool that enabled us to accelerate customer forbearance support massively allowing us to offer support to many 1,000s of customers rapidly.
We have a new Click & Reserve tool for dealers, in order to help them continue selling cars. We provided this tool for free until the end of February, which has proved very successful.
Our digital marketplace platform, findandfundmycar, enabled customers to search dealer stock and initiate the car buying and financing journey despite closures. Consequently, we’ve seen engagement with the platform increase with a significant proportion of vehicle and finance sales influenced by this digital channel, enabling dealers to embrace the rapid shift to digital sales and financing in a distance sales world.
We also introduced sentiment analysis to our early adoption of machine-learning, which is used to connect us to customers. It allowed us to establish sentiment and vulnerability scores to enhance our understanding of how customers are feeling about engaging, enabling the team to identify and prioritise sensitive cases.
Jon Slater, interim chief strategy and marketing officer at MotoNovo
How has consumer behaviour changed in the last 12 months?
The very notable change has been in terms of digital engagement. Digital usage increased from 57% of customers in 2019 to 80% in 2020.
While some people have been under financial pressure due to the pandemic, we should not overlook that households' savings grew rapidly during lockdown. In 2019, people in the UK saved 6.75% of their income. In Q2 and Q3 2020, this figure increased to 27.4% and 16.9% respectively.
Our research revealed that people saved over £600m in petrol/diesel costs alone during the initial lockdown. Of those that were surveyed, 54% said that they want to use the money and time saved on staycations and leisure trips instead.
The change in savings levels between Q2-Q3 last year points to the potential for pent-up demand being released. This is reflected by our 17% increase in finance agreements post-lockdown (July-Oct) in comparison to the same period in 2019. Having said that, a 16.9% savings level is historically high, which points to continuing financial caution from many people.
Do you believe consumer behaviour will be permanently changed by the pandemic?
Yes, we do in many ways. We have seen the pre-pandemic shift towards digital playing a more fundamental role in the end-to-end car buying a financing journey accelerate as a consequence of Covid-19.
We’ve also seen changes in commuter habits, ongoing considerations around using public transport and an increase in domestic holidays. Subsequently, there is a variety of customer trends playing out across the near and longer term. A number of these could increase personal vehicles sales and usage.
Do companies run the risk of falling behind the rest of the industry if they do not digitalise?
Yes, but we shouldn’t overlook the importance of service and personality. While the move to online was evident last year, we should not ignore the importance of local and we can see a future where the industry could (and should) converge on a hybrid approach where the best aspects of digital and physical interactions come together in a consumer-centric journey.
As the UK came out of the first phase of lockdown, YouGov data pointed to a shift in consumer behaviour with 30% of consumers saying they had used local suppliers more since the pandemic struck and 80% of them aimed to continue doing so in the future. For many retailers, this omnichannel model will need to feature.
What do you think the car-buying process will look like in 5 years’ time?
The online shift will continue, and I expect the online experience for consumers to be more immersive and engaging, but there will be a critical and continuing role for dealers, particularly those progressive dealers who see the opportunity in change.
In the used car space, I see it as an omnichannel model where customers find their car and dealer online, complete their finance online. However, for some buyers, the car purchase journey will continue to include the showroom. Many people will still want to test drive the car and dealer experience with such a major cost. The role of the dealer will be important because of the aftersales implications.
The shift to an ‘agency’ model in the new car space will continue and in five years may well dominate sales.