Dealers must adapt to Covid era
Dealers need to ensure their lending panels are fit for the coronavirus era used car market.
Startline Motor Finance CEO Paul Burgess explained that, while the used car market was currently booming, there were two longer term, interrelated trends underway that needed to be considered.
He said: “At the most fundamental level, lending panels are constructed so that dealers have a range of products and credit appetites to suit the profiles of their customers. The question right now is, are those products, credit appetites and customer profiles going to work over the next few months and into 2021, what you might call the coronavirus era.
“The first thing to mention is that most prime lenders have tightened up their lending criteria, so more business is going to cascade down the motor finance market.
“The second is a wider but more important point. A lot of people are likely to be hit hard financially by the coronavirus pandemic, something that is already underway, and more people who want to borrow won’t meet the criteria of more lenders. At a point in time when the used car market is undergoing the boom that is currently being seen, these factors seem less important but it is probably inevitable that both will start to have an impact, if not in the near future, then in the medium term.
“Our belief is that dealers need to start thinking in these terms, looking at the kind of changes in the profile of their lending that they have seen since the start of lockdown, extrapolating them into the future and seeing if their lending panel is fit for purpose.”
