Strong residual values (RVs) that help create an attractive motor finance proposition will be crucial to the success of Chinese manufacturers entering the UK market, iVendi is predicting.
These new players bring with them a wave of electric vehicles (EVs) that have been turning heads with their competitive pricing and overall appeal. However, there's a vital component that may determine their success - strong residual values (RVs).
Darren Sinclair, Chief Commercial Officer at iVendi, a leading motor retail technology specialist, believes that the success of Chinese manufacturers in the UK market will hinge on their ability to create an attractive motor finance proposition. As he points out, while Chinese EVs have been competitively priced and generally attractive, these attributes may only go so far without the right financing options to support them.
"Delivering competitive and easily accessible motor finance will be essential to the success of Chinese manufacturers entering the UK market, and this will very much depend on finance deals that will be based on predicted RVs," says Sinclair.
The RVs of a vehicle play a crucial role in determining the cost of ownership and, by extension, the attractiveness of financing deals such as Personal Contract Purchase (PCP). These RVs need to be strong enough to reassure customers that their investment in a relatively unknown brand is a sound one.
Sinclair notes the success of MG with their MG4 model, which boasts an appealing headline PCP price. However, he emphasises that building RVs that support such deals is more challenging for newcomers without established brand equity.
The Chinese manufacturers will introduce a variety of models into the market, each targeting different segments. These new entrants face the unique challenge of building confidence among used car dealers and buyers, who may be apprehensive about purchasing from a brand with no track record in the UK.
To address this, Sinclair stresses the importance of creating RVs that enable attractive PCP rates. This means that manufacturers need to focus not only on competitive pricing but also on establishing brand reputation, instilling confidence, and demonstrating a professional approach to remarketing.
Furthermore, technology will play a pivotal role in simplifying the motor finance decision-making process. As Sinclair notes, manufacturers, including the new Chinese entrants, are increasingly recognising the value of using platforms that facilitate a fast, easy, and compliant customer journey, helping potential buyers find the right finance product for their needs.
The success of Chinese manufacturers entering the UK market with their EVs will depend on their ability to create strong residual values that underpin attractive motor finance deals. With a focus on building confidence, leveraging technology, and delivering competitive financing options, these manufacturers aim to establish a strong foothold in a rapidly evolving automotive landscape. As they do, the future of the industry promises to be as electrifying as the vehicles themselves.