Why PCP finance makes great sense for dealers and their customers

Great customer outcomes, customer retention and the opportunity to acquire used stock in the future are at the heart of MotoNovo’s focus on used car Personal Contract Purchase (PCP).

Great customer outcomes with a PCP for used car buyers rely upon dealers understanding customers’ needs and budgets and outlining how a PCP agreement can help them.

The key messages to convey are:

• Under a PCP agreement, customers finance a car’s depreciation rather than the total price, which reduces the monthly cost.
• The worst of a car’s depreciation occurs when it is purchased new or nearly new; used car depreciation is invariably slower than for a new car.
• With its slower depreciation, MotoNovo can forecast a used car’s Guaranteed Future Value (GFV) based on the initial price and agreed annual mileage, which again helps keep monthly finance costs lower than those of a comparable HP or loan agreement.
• At the end of the agreement, the customer is in control of their ‘Retain, Return, Replace’ options, as we say at MotoNovo.

As well as helping a customer to buy a car at an affordable price, there are the longer term benefits of a PCP through MotoNovo Finance for dealers;

• Under a PCP agreement, customers are less likely to seek an early settlement than HP. This means dealers have a clearer idea of when the customer will next be in the market for a car change.
• MotoNovo will keep the customer informed in the run-up to the end of their agreement about their options and direct them to their original supplying dealer for support.
• Once in the showroom, dealers can bring the  ‘Retain, Return, Replace’ options to life. If they want to retain the car working with MotoNovo, it can be refinanced; if they want to return it, the dealer is in a pole position to buy valuable stock without it going to a broader market, and if they want to replace it – well it is a new sales opportunity.

In short, MotoNovo’s PCPs are designed to encourage customers to stick with their dealer and return to choose a newer model every three years or so. This retention opportunity all starts in the showroom, taking the time to explain the product, agreeing on an annual mileage that meets their needs, and providing details on the end-of-agreement options and the need to ensure the car is maintained correctly. Get this right, and the seeds will be sown for a long-term relationship.

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