The paper outlines key priorities for auto finance organisations as they seek to capitalise on emerging opportunities for auto – electrification, servitisation and connectivity – despite current market disruptions arising from the war in Ukraine, supply chain shortages and a cost-of-living crisis in the UK. The first white paper, published in March 2022, can be downloaded here.

The new whitepaper, which is published in association with Finativ – the new consulting and advisory firm led by Christian Roelofs which was launched in the UK in June 2022 – tackles the question of how financial providers can ensure they turn the current market volatility into an opportunity to grow and further establish themselves in the motor finance market.

Capita’s 20-page whitepaper provides a very comprehensive look across most drivers of change for the industry, contains lots of engaging material and will be of interest to all auto finance executives, and not just those who are focused on the UK market.

The paper considers the opportunities by finance providers to better serve customers, for example, by moving away from simple mileage limits to progressively more flexible “pay-per-drive” models where customers are able to pay more to use their cars more; and can change their contracts to meet their changing personal needs, even lowering their payments when usage is unexpectedly low.

It highlights how consumers are increasingly “uncomfortable with the idea of paying so much money for a car that stands parked for 95% of the time they own it.” More honesty is needed from financial institutions who have a role to play in educating consumers about the features and benefits of the different finance solutions available and their suitability to a customer’s needs at a given time. Providing the company-car experience to private consumers gives them the added benefit of all aspects of car ownership – vehicle, insurance, maintenance and electric/fuel.

The paper considers the broader shift from car ownership through usership, membership and ultimately to Mobility-as-a-Service models which are more aligned with the changing needs and expectations of newer and younger drivers who may not be as accustomed to car ownership or car brand loyalty as older generations.

Focusing on the primary motivation for OEMS to fix the retail price of cars nationally and the opportunity it presents for independent motor finance and leasing providers, the paper discusses why the industry is moving dealers from franchised to the agency model. The logistics and challenges of delivering MaaS products could change the role of the dealer, becoming less reliant on retail sales revenues and more invested in being the local delivery agent for the providers of service-based products.

Finally, it takes a look at the opportunities for leveraging value from connected car data – and using that data to deliver value to customers. This is a topic which AFC knows is on the minds of many automotive captives right now. The ability to leverage data from connected cars is considered in the industry to be a great idea – but unfortunately many businesses are lacking in the knowledge and expertise on how best to monetise car data. Legislation surrounding connected car data is limited, especially in the UK, causing problems for customers and OEMs to derive real benefits in the short term.

Capita’s whitepaper contains a lot of thought-provoking content about changes facing the auto finance industry that readers can discuss and debate. In such a fast-moving dynamic industry, it is very difficult to predict with much certainty what will be the direction of travel. The paper provides Capita and Finativ’s vision – which you may agree with or may wish to debate – but it is a useful read and informative nonetheless. You can download the whitepaper at https://www.capita.com/our-thinking/capitalising-volatility-motor-finance-market