The continuing growth and confidence of the SME market is a positive sign for the UK LCV market and while new sales fell back according to the most recent SMMT data, Mann Island Finance’s MD John Hughes believes a smarter approach to finance can help dealers to increase sales of both new and used vehicles; he notes;
“In many ways, the expanding SME market is different to the traditional ‘business customer’ of yesteryear. They want and expect a more consumer-oriented service experience and high-quality finance guidance; especially in areas such as tax efficiency. Without this type of expertise and confidence dealers are missing out and specialist LCV brokers are prospering. Dealers need to choose whether or not to compete and if so what expertise they need to develop or access.”
LCV sales have shown strong, consistent growth over recent years and while 2017 new van sales fell back slightly, they were still the third highest on record.
At the same time, the used market has had to cope with a scarcity of product that has seen buyers paying premiums, even for older higher mileage units. The challenge Hughes has identified is that all too often dealers are light on the confidence or access to the skills needed to talk business finance products.
While it is true that many LCV buyers still opt for straightforward Hire Purchase, there is a range of other financing products available. Leasing, contract hire, short-term rental or even variable rate payments may be more advantageous for a business customer. This gap in the market has become increasingly clear to Mann Island, which provides LCV expertise for some of the very largest dealer groups as well as smaller used-vehicle operators. As well as an extensive product range, it is the expertise of the business’ field people in helping dealers by talking directly to customers that is apparently so important.
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In closing, Hughes concludes; “it bothers me that too many dealers are missing out on business user finance expertise for their LCV sales. Finally, if there is one additional reason to encourage dealers to get smarter with the finance side of their LCV sales, it is that pretty much every LCV buyer also runs a car and that small business owners often share their good (and bad) van buying experiences. Get it right and one sale really can become many more.”
The Growing Importance of SME Business in the UK Today
- There were a record 5.7 million private sector businesses at the start of 2017.
- There has been sustained growth in the total business population, with increases of 2.2m (+64%) since 2000 and 197,000 (+4%) since 2016
- Small businesses accounted for 99.3% of all private sector businesses at the start of 2017 and 99.9% were small or medium-sized (SMEs).
- Total employment in SMEs was 16.1 million; 60% of all private sector employment in the UK.
Source Federation of Small Business1