The battle for future captive car finance business
The battle for captive auto finance business in the future will be won – or lost – in the world of digital real estate, according to Jonny Combe, General Manager Product & Channel Development at BMW Group Financial Services.
And the reasons are obvious – when more than half of Generation Y car buyers would currently prefer to visit the dentist than haggle with a car salesman – and when many view visiting a car showroom “rather like visiting a funeral”.
Combe told delegates at the recent White Clarke Group Auto Captives Summit in London that the disruptors in the shape of the new breed of Financial Technology (Fintech) companies have already spotted where the demand lies in the new generation of car buyers.
The battle to win car sales was fought out in the showroom – but no longer, because Millennials and Gen Y buyers will simply not be there
“With Gen Y buyers forecast to be accounting for around 75% of all new vehicle sales by 2025 – you will have to get your selling approach correct – or you’ll be dead on the water,” he stressed.
Combe told of a BMW report into consumer purchasing behavior which revealed that whereas in 2003 car buyers made an average of four visits to a showroom prior to making a purchase, by 2013 this had diminished to 1.5 visits. “Also,” he said, “in 2003 only 1% of car buyers researched their car online before making a purchase – by 2013 this had risen to 92%.”
“Soon,” he added, “they will be making the purchase itself online – by their mobile phone.”
To combat this, captive finance auto companies need to revolutionize their websites especially with regard to video content and mobile optimization until they become “designed as mobile-first”.
Combe showed delegates a range of potential and actual disruptors which are quietly beavering away changing the way people will buy their cars – including by their methods, their techniques and their mobile technology.
“Previously,” he said, “the battle to win car sales was fought out in the showroom – but no longer, because Gen Y buyers will simply not be there.”