DEMAND for cars, new and used, is rocketing as we come out of lock down although shortage of supply is likely to put the brakes on.
Used cars are particularly in demand, driving prices up. Alphera Financial Services, which primarily deals in used car funding, has seen usage double in the past six to eight months.
Adam Harley Head of Key Accounts at Alphera, said used car values are exceedingly strong and right now and while there is enough stock, although highly priced, there may be further impact later in the year.
The shortage of semiconductors could see a slow-down in production. Harley said that it’s possible some cars will come off the production line with lower specification.
He added: “There’s a lot of semiconductors which go into on board electronics that maybe not everyone needs.”
Harley moved into his current role from with the BMW Group in the middle of the pandemic last year and has been involved with the leasing sector for many years.
He said: “It’s been an interesting first year and difficult in that I’ve not been able to meet face to face with brokers and partners, or even with colleagues, but I think we are in a good place in terms of relationships.
“We have done a lot during the pandemic to support brokers, helping them to function as close to normal as possible while fulfilling all the obligations to the FCA. As we come out of lockdown we are seeing pent up demand for vehicles but a slow-down in supply,
“The key for our partners is getting the product right and getting the APR right. We introduced our one rate, one commission at the end of January but we are looking to see if that meets all of our requirements.
“We will most likely see a move towards rate for risk where the APR is determined by the customer’s credit score. The higher the credit score, the lower the APR.
“There are a number of brokers looking at that as an alternative. We’ve not yet reached a conclusion on this but ultimately we have to make sure its remains legal and compliant.”
Despite being locked down for much the time, Harley said he had been able to maintain contact with brokers and has been impressed by their forward thinking in difficult times.
He added: “I’m also impressed by what and how they deliver and are able to tweak products to meet the market expectations. We want to understand even more about their business.
“It’s not enough to just deal on a transactional level. If we are not helping them to realise their strategies we can’t operate as a partner. We do not want to be just one of many funders.”
