DSG Financial Services has launched Connected Car Services (CCS), a distinct brand from DSG that offers brokerage and other services, with a focus on independent dealers. Motor Finance speaks to division head Laura Barker to find out more about the proposition.
DSG’s proposition has, according to Laura Barker, traditionally looked after AM100 dealers and large car supermarkets.
“We believe we have the right proposition there, so why should a customer not experience the same service going into a used car dealer? And the dealers themselves, why should they not have the same service, technology, compliance and support that everybody else does?” she adds.
Asked why the decision was made to launch a separate brand for the new market, Barker explains: “We have our relationships with the AM100; we wanted to keep that slightly separate and have a more dedicated on-the-road team.
“Used car dealers are going to need a more hands-on, personal approach from the guys on the road. They might need to service their site once a week, whereas the AM100 do not require that.”
Despite the new name, the aim will be for CCS to offer everything that DSG offers, but tailored for smaller independent dealers. An example of this is the lender panel, which differs between the two divisions.
Barker says: “DSG has a similar amount [of lenders], but more are prime. They have lenders which only deal with large shiny showrooms. The lenders we have on our books are more open and understanding of the smaller dealers.” The CCS panel includes Unity, DSG’s own lender, which was first announced at the end of 2016.
Barker explains that the panel has been designed to offer finance for as wide a variety of consumers, dealers and vehicles as possible. She explains: “Not everybody has got the money to go buy £100,000 worth of stock. If somebody just trades and sells 10 cars a month and their average balance is just £2,500, it is difficult to get any finance provided to support them on that. We will be able to help those people as well.”
CCS has developed some unusual products to support smaller dealers. One example is a finance lease with a balloon for light commercial vehicles (LCVs) up to four years old. Usually only LCVs up to 12 months old are eligible for balloon products, Barker explains.
In the new year, CCS will also look to offer a personal loan facility to garages. The reason for launching this is, again, to try and maximise the number of dealers and cars to which CCS can provide or broker finance.
On one hand, Barker says, offering personal loans means more cars can potentially be available with monthly payments – personal loans do not have the same loan-to-value restrictions as HP and PCP, and can be offered on older or cheaper cars than might not otherwise qualify for traditional point of sale (POS) finance products.
At the same time, it will help small dealers with regulation. Personal loans will be offered on a separate facility – the customer will log on and apply directly to CCS, which will take responsibility for the customer loan. As a result, dealers pursuing this option will not be required to be Financial Conduct Authority (FCA)-authorised, as CCS will take full responsibility.
Beyond the personal loan facility, CCS offers the traditional POS products of PCP and HP, and Barker says the broker can help with things like negative equity, EU driving licences and taxi firms.
Asked whether CCS will be targeting dealers that do not currently have a finance offering, or those looking to expand an existing finance offering, she says: “All of it. At the moment our main focus is on people who do have finance facilities. We believe we can dovetail in with what their finance provider already does, and add extra strings to their bow.”
In some respects, the timing of the launch of CCS is ideal. The car market has slowed over the past months, and most industry experts expect this to continue into 2018.
At the same time, the regulator has taken more of an interest in motor finance, and is due to publish its exploratory review in the first quarter of 2018, which could result in an increased regulatory burden for dealers. For smaller dealers, the squeeze of increased compliance costs combined with slower sales or falling margins could make finance a less palatable prospect.
As Barker puts it: “It is the right time [to launch CCS]. 2018 will be a challenging year for the used car and new car market. All we are trying to do is support every avenue that a dealer needs to work with its customers.”