Motor industry lessons from 2020 and trends for 2021

What did we learn from 2020?

Lesson 1: A more resilient market than expected

In March 2020, nobody could be blamed for expecting a massive crash in the market for RVs as the UK went into its first national lockdown. However, that crash never materialised.

In fact, changes to transport have had a largely positive impact on the industry. A massive shift towards the use of private transport over the course of the year helped boost figures.

“Stats from October last year show just what had happened to transport in the UK… whilst train usage was down to about a quarter of pre-COVID levels, passenger car transport stayed at 95%.”

Dealers in the premium end of the market also saw strong figures – some described customers “revenge buying”, or investing in a new vehicle as a way of fighting back against a difficult and draining year.

Lesson 2: We’re all moving towards a more digital future

As people were stuck inside, we saw a rapid acceleration in customers’ use of digital. Even so, the majority of business we transact is still being completed physically with a dealer. It’s clear customers aren’t quite ready to go fully digital just yet. But don’t let that lower your guard – we’ll be talking about the future necessity of digital later in this article.

Lesson 3: Working together, we can do so much to support customers

Collectively, the motor industry has handled the pandemic very well. The strength of our partnerships has been more than proven. It’s been very positive to see the motor industry coming together to help customers cope. At Black Horse, we helped over 150,000 customers – just under a fifth of our total number – with forbearance. At the same time, we aided dealers with extended stocking. Supporting dealers and customers has been the focus of our efforts throughout the year, and we were pleased to see so many other members of our industry with the same aims.

Lesson 4: FCA regulations can give customer confidence a boost

The final key lesson we learned in 2020 came from the new FCA regulations relating to Commission and Commission Disclosures. We believe the regulations are going to be great for the industry – they’ll develop customer confidence in the market and help people feel more secure in their transactions with us. That can only be a good thing for everyone.

“The spirit of the rules is firstly to give customers transparency on your relationships – and to do that well in advance of when they are actually signing on the dotted line.”

​​​​​​​What might 2021 bring?

Prediction 1: Digital is going to continue to grow in importance

As we touched on above, digitisation is more important than ever. In the past, it’s been possible to separate the physical and the digital journey – but that isn’t going to be the case going forward. You need to be able to follow customers at all stages of the journey, whether they’re physically in your dealership or browsing your website. The dealerships and manufacturers who manage to create a seamless experience across all channels will win out.

“The development for me is how you weave digital and physical journeys in an integrated way – to think of it as one journey.”

Prediction 2: Coping with more economic hardship

The new lockdown is obviously causing a lot of disruption, but it’s not exactly the same scenario as the first lockdown. Yes, dealerships and forecourts are closed. But servicing, remote sales, vehicle supply and all vital logistics remain open. And, as we saw during the November lockdown, dealers have done a great job of getting their digital propositions sorted to service customers remotely. From the conversations I’ve had with dealers this year, there’s an appetite to trade through this and keep the car market moving.

Once the lockdown ends, we’re likely to feel the pandemic’s other effects throughout this year. Economic issues are largely being drowned out by the need to focus on containing and combating the disease, but the scale of public debt is going to be impossible to ignore. Sadly, unemployment and economic difficulties are inevitable. Hundreds of thousands of customers will be facing financial difficulty this year, and as an industry we need to be there for them in the same way we were throughout 2020.

Prediction 3: Without more investment from the government, electric vehicle (EV) uptake may be slower than desired

The government’s decision to accelerate EV adoption and bring the ban on the sale of new traditionally fuelled vehicles forward to 2030 was a welcome one. However, we need more incentive in the used market to make sure this goal is achievable. Currently, all the incentives are weighted towards new car buyers. If the used car market doesn’t thrive, it will negatively impact new car sales – and we’ve been very vocal with the government about this.

Additionally, we’d like to see more support from the government on developing EV infrastructure. With a great deal more funding being channelled into HS2 than into EV charging, there’s going to be a real struggle to keep vehicles moving. It’s not enough simply to put chargers in place, either. Serious attention needs to be given to the reliability of the network to ensure public confidence.

Prediction 4: We’re going to see a rise in an ‘agency model'

It’s looking likely that dealerships’ roles are going to move more towards acting as an ‘experience centre’. We’ll see dealerships adding value through in-person interactions and technologies, expert sales consultations, test drives and vehicle handover – not far away from the concept Apple uses in its stores.

Prediction 5: We’ll find our feet post-Brexit

I think two important things came out of the Christmas Eve deal. The first is the no tariff structure. That was essential and we got it. But the second, which is just as vital to the automotive sector, is the changes to the rules of origin. These mean the UK is still a viable place for car manufacturing to sell back into Europe and for European manufacturers to continue selling their product.

The transition rules also open up an amazing opportunity for the UK linked to hybridisation and electrification. We’ve got to become a source manufacturer of battery motors and we’ve only got around five years to get our act together. With the incredible technical prowess the UK has in automotive, I’m really optimistic about this challenge. But it will need investment as well as government and industry working together to make that happen. The sooner the process begins, the better.

What is Black Horse doing to support this vision for the future?

Above all else, we are vehicle finance experts who love what we do. We’ll continue to bring that passion to our business, with continued focus on relationships.

“I am so lucky that I have a business full of super-dedicated, passionate people who know what they are doing and know the market.”

We’re also going to be focusing on digital. We’re creating a multi-channel financing journey, so customers can move seamlessly from digital to the physical retailer and back to digital. Keeping technology at the forefront means we can improve the journey for both dealers and customers, and continue to support dealers as they evolve their own models.

Alongside this, we’ll be constantly reviewing our products. If we find somewhere they could be more flexible, we’ll make changes where we can so we can continue to help customers as their needs evolve through 2021 and beyond.

“My ambition for Black Horse is for us to remain a market leader that puts customer outcomes and our long-term relationships with dealers at the heart of what we do. Whatever changes come about, we’ll stay true to those things.”

We hope Richard’s insights provide food for thought and encouragement as you prepare your dealership for a new year and new challenges. If you’d like to explore more industry analysis from Black Horse, browse more articles.

Back to 'Insights From The Field'