European automotive

Green assets: Financing is ready, but infrastructure is falling behind

In association with Leaseurope and Eurofinas


The Asset Finance Connect ESG Unconference brought sustainability representatives from independent lenders and captives together to discuss the emerging opportunities and challenges facing the industry as we transition to net zero.

Asset Finance Connect’s head of content, David Betteley, moderated a session focused on the uncertainties confronting the ‘green’ asset finance industry – new risks, new technologies and residual value challenges, asking the questions: What is a green asset? Who is best placed to deal with these changes – captives or independents? Is regulation the driving force behind this transition?

What is a green asset?

Defining a green-renewable energy asset isn’t easy! When you think of green assets, most people think of traditional renewable energy assets such as solar panels and wind turbines for reducing carbon emissions. However, these assets are evolving with the greenwashing agenda and now must include the accompanying infrastructure.

Many participants highlighted the shift in green assets over the last four to five years with regulation playing a role in how green an asset is with Scope 3 reporting focused on the supply chain.

There is a growing concern about the cost of going green, especially at the shareholder level, and the associated risk, increasing and inconsistent regulation, and new technologies.

There is an additional risk from a traditional asset financiers’ perspective as some renewable energy assets wouldn’t pass the traditional funding test to assess the suitability for financing secured on an asset.

With changing technology, such as fibre optic cables and battery storage units, assets that can be collaterised are now different to those in the past. Many green assets are static and would therefore fail the identifiable, repossessable and resaleable test, which is seen as risky for finance companies even though these assets can still represent satisfactory collateral.

There should be no risk and no issue with funding such static key assets that are pivotal to the client. As the world is changing and what you can collateralise is changing, a new industry mindset is needed to look at “behavioural collateral”.

Some participants believe that returns on investments in green assets are cyclical and unstable. Changing regulation results in some green assets no longer being ‘green’ within one to two years, leading to an unsteady and volatile return on green investments.


Circularity has been driven by regulatory guidelines, with people and businesses being forced down the green route because of regulation, was the overwhelming feeling from unconference participants. Regulation has developed over the past 4-5 years and is rigorous over what is deemed to be ‘green’.

It was noted that the impact of regulation on the green agenda is substantial, while the differences around the world with differing net zero dates in various regions create much confusion. This has led to difficulties for global manufacturers who are facing different net zero target dates in different countries. However, one thing is similar in that regulation is evolving everywhere, with governments changing the rules but giving the industry very little notice.

The introduction of Scope 3 reporting has also caused difficulties for the industry, especially when measuring an asset’s CO2 footprint in the supply chain. Many companies are at a loss as to whether they are measuring and accounting for carbon emissions in the correct way.

It was felt that there is a need to study regulation so that everyone can work towards the right solutions. There needs to be consistency in regulation in the long term, to avoid the massive distorting impact of current changing rules.


We are entering a ‘new world’ which requires a mindset change over what is risk and what can be used as collateral to minimise that risk. New financing models and new green assets are causing uncertainties for the industry surrounding new risks – additional credit risk, usage and performance risk, compliance risk in the regulated market, risk to portfolios, new technologies and residual value (RV) uncertainty.

Finance companies see increased risk when entering into long-term contracts for green assets that look good today but could be redundant within five years. Rather than take this risk alone, finance companies are increasingly looking to partnerships and governments for support.

Business models such as ‘equipment-as-a-service’ and ‘pay-per-use’ models bring with them usage and performance risk, added risk for OEMs to understand and manage. Partnering with specialists in the implementation of pay-per-use solutions such as Findustrial can help manufacturers to develop usage-based and future-oriented business models using data-driven platforms to help OEMs embrace these new solutions.

Green assets tend to have a long lifecycle and this increased usage can affect asset valuations leading to more risk. The RV risk is being pushed from OEMs to financiers who don’t fully understand performance risk. Funders generally do not understand assets and the way they work and, until that changes, the market will move to asset managers in the middle of the life cycle who can exploit the ‘new world’ market as they truly understand the asset and its use.

Lack of infrastructure

It was unanimously felt by unconference participants that the industry is backing the transition to net zero with liquidity being added to the green agenda – but unfortunately the infrastructure is simply not there.

For example, the use of hydrogen as an alternative energy source was discussed during the session, but again the infrastructure is challenging with investment needed for infrastructure to bring the overall cost down for the customer.

Technology, assets and financing products are all geared around environmental issues, but there are many questions surrounding the infrastructure: How will it be financed? Who takes responsibility for the infrastructure?

Many industry participants feel that government agencies need to be involved in the funding of infrastructure. However, when we look at the first petrol stations, it was not governments, but private energy providers who financed the forecourt infrastructure.

Collaboration is needed between governments, energy providers and corporates to solve the issue. Once you have volume and scale, the infrastructure will come and be a massive funding opportunity for the industry.


Unconference delegates discussed the importance of ecosystem partnerships with manufacturers, lenders, start-up companies and government agencies sharing the risk and cost of green assets and their much-needed infrastructure.

Orchestrating a range of partnership arrangements will enable customers to mitigate the cost and risk of transitioning to green assets.

Usage-based and servitization models are front and centre with customers, but there needs to be a focus on providing money while liaising with partners for these new models.

Whilst banks have expertise in assets, RVs and credit risk at the beginning and end of the asset’s life, when focusing on the circular economy there is a big gap when it comes to the middle of the asset’s life. Bank asset teams are not well placed to look at usage and servitization as it is not credit risk. Therefore, they need to partner with asset management teams who really understand the whole lifecycle of the asset: “Supporting an asset manager in the green agenda is critical”.

It was also noted that the industry needs to deepen manufacturer relationships and enter into risk sharing or buy-back agreements in order to allow proper risk-taking on new assets.

Lenders need to get smart enough to assess which manufacturers have the right technology to make it past the first wave of consolidation that will inevitably occur in the coming two to three years. Knowledge needs to expand beyond a simple financial analysis with a need for lenders to develop the acumen to go beyond the numbers and get comfortable with the long-term potential of start-up players in the transition.

Captives v independents

The unconference session reignited an on-going discussion about the differing challenges and opportunities for captives vs independents in the transition to net zero.

Large bank independents are suffering from internal inertia and therefore not using their balance-sheet strength to maximum advantage. One non-captive lender noted that independents are falling behind captives in terms of the level of technology but are more sophisticated in terms of products.

It was highlighted that there is now a better appreciation of purpose-based decisions and independent bank lenders are now addressing the right thing to do. Banking is changing, it has a role in society and needs to make a change.

By releasing the inertia from the past, one independent lender noted that they are now able to be more creative and see servitization as a way of moving forward and partnering with others, with a key objective to explore emerging service providers and provide funding.

Risk and opportunities for captives are quite different than those faced by independents. When it comes to risk, independents can choose risk and make decisions, while captives do not have these options – they have to support their manufacturers and cannot choose risk.

Unlike manufacturers and captives, independents are not experienced with the circular economy and the whole life cycle of an asset, with expertise purely at the beginning and end of the asset’s life.

Independent lenders need to build relationships with partners when it comes to circularity and financing an asset for more than one life, and where there is uncertainty around the RV of the asset.

Captives, on the other hand, are willing to promote the circular economy and optimise the life cycle of the asset. They have the ability to refurbish and recondition end-of-initial-life goods and re-sell them within a closed OEM/captive/customer marketplace.

Captives see that while they are in a privileged position due to their tight OEM-parent relationships, they cannot do it all by themselves as they can’t possibly have enough risk appetite to cover all the transition needs. There will come a point where they get maxed out with individual customers or with certain asset types. OEMs need to become open to entering into risk-sharing relationships and partnerships with non-captives as well.

Concluding remarks

The takeaways from the session undeniably focus on the lack of infrastructure and investment in infrastructure. While the financing opportunities are in place, the investment in infrastructure is falling behind and affecting the investment in green assets.

The impact of regulation on the green agenda was addressed with the participants highlighting that regulation is constantly changing and is inconsistent on a global scale. There is a need for consistency in regulation as it can be seen as the driving force in the transition to net zero.

A need for increased collaboration and partnerships between lenders, manufacturers, governments, start-up companies and pay-per-use specialists was noted to spread the increasing risk and cost, and to better understand new business models, new risks, RV uncertainty and new technological challenges.

European automotive

Vision for the future: how Arval plans to thrive in a changing market


In Asset Finance Connect’s recent webcast, in association with Leaseurope and Eurofinas, Arval’s Deputy CEO and Chief Commercial Officer, Bart Beckers, shared his vision for Arval’s future in a changing and challenging market.

In BNP Paribas Group’s 2022 full-year results, it was reported that Arval had expanded its global leased fleet by 8.3%, including acquisitions, growing the fleet to over 1.6 million. Globally Arval leased around 300,000 electrified vehicles by the end of 2022, four times the amount compared to 2019. And two successful acquisitions in 2022 of Terberg Business Lease Group and BCR Group have helped to expand Arval’s fleet.

Expanding fleet businesses

With acquisitions aplenty in the fleet industry, vehicle fleet businesses are simply getting bigger, with the merger of ALD and Leaseplan scheduled for 2023 creating a combined fleet of 3.5 million units, Arval with 1.6 million units and partner company Element within the Element Arval Global Alliance with more than 4 million units, as a whole. In addition, from a BNP Paribas standpoint, millions of vehicles are financed (including Arval’s fleet).

With fleet numbers and operator sizes expanding, more cars are needed each year presenting greater challenges for large fleet operators to source the cars they need during times of supply issues. As Bart Beckers notes, “this is a challenge but not a new challenge.”

“Getting the required cars while facing supply issues is a challenge, but not a new challenge.”

Beckers believes that size does indeed matter in the fleet industry but not just on a global scale. On a local scale, fleet operators can work with local clients and partners, while on a global scale they are able to invest in solid IT and digital suites to further leverage this scale and invest or indeed acquire competitors and partners.

A significant strategic partnership can be found with BNP Paribas’ partnership with Jaguar Land Rover (JLR), where the power of a bank can make a real difference to the scale of a business. With Arval joining up with their BNP Paribas colleagues in personal finance and automotive retail, BNP Paribas Group can offer a full suite of possibilities in a seamless one-stop-shop environment with a digital suite that is built for those specific needs. Different BNP Paribas divisions can therefore be used by the partner, such as JLR, for different needs. Such an operation has been deployed in nine geographies at the beginning of 2023 with BNP Paribas Group optimistic about how it will make a difference to the market.

While many vehicle leasing companies are merging their retail and fleet divisions, Beckers does not see this as an additional problem but rather a growth opportunity. Out of Arval’s 1.6 million vehicles, more than 1 million are still in the corporate sector and the rest is other business including retail, where private leases are a growing segment in many countries and the domain where Arval are competing head-on with manufacturers.

Transition to BEVs

Bart Beckers believes that price matters in any industry and particularly in the auto industry with the transitions to electric vehicles. Price is always an important issue, whether it is a private individual or large company.

“Price is always an important issue in the auto industry, whether it is a private individual or large company.”

To see the benefits of electrification, fleet managers need to adopt the TCO (total cost of ownership) method for analysing fleet cost and the TCM (total cost of mobility) approach, if they start using other forms of mobility, rather than using a monthly rental approach.

Larger companies are now driven just as much by their CSR and ESG agendas as TCO. And they also need to keep their own employees satisfied with the company car being used as a loyalty instrument. Charging infrastructure is extremely important too and must be affordable, with energy networks and energy pricing following suit.

Arval is concerned that cars are becoming less and less affordable. Bart believes that it is important that everyone (and not just the well off) can afford a car.

New entrants within the OEMs are bringing more accessible vehicles and prices to the global market, and Beckers believes that this should be embraced.

ESG and CSR are now seen as big drivers in the fleet business with large multinational companies in mature local markets willing to pay a premium for the environmental option. As Beckers confirms, “ESG is extremely important and growing in importance with large multinationals” as it is one way to really make a difference.

Often this is combined with fiscal incentives, with large corporate accounts pushing forward with governments’ efforts. Bart believes that fleet companies and governments must help as “we owe this to the environment as an industry… and Arval wants to play a role.”

Arval is taking a leading role in the net zero transition with feedback from Arval Mobility Observatory Fleet and Mobility Barometer highlighting that in most countries (one in two of the 25 Arval countries) they have already started embracing EVs and, at the end of 2022, Arval’s new order intake over all Arval entities was 35% EVs.

As part of BNP Paribas’ Horizon 25 strategic plan, Arval’s objective is to have 700,000 electrified vehicles in fleet by 2025, of which 350,000 BEVs. At the end of 2022, there were 300,000 electrified vehicles as a result of Arval’s determination and taking calculated risks with residual values (RVs).

However, the results of AFC’s accompanying webcast poll highlight that the main force influencing the selection of fleet BEVs over ICE is price (financial – personal tax advantages), with sustainability coming in second. These results link to a recent Arval Mobility Observatory survey conducted by IPSOS across six different companies who are mature clients of Arval. The study found that price and fiscal benefits were the most important consideration for companies, while electrified vehicles came fifth and environmental considerations unfortunately were tenth in the survey: as Beckers sadly noted, “Price and fiscal benefits are needed to get people on board.”

“Price and fiscal benefits are needed to get people on board the electrification journey.”

Setting residual values

Setting RVs is a difficult job, especially with some fluctuant new model prices and new companies with no heritage, such as Chinese OEMS, entering the global market.

Beckers explains in the video below that, while not an easy job, setting RVs for electric vehicles is Arval’s core competence.

When setting RVs, Arval initially assesses the vehicle and can then influence the price and the possibility of vehicle multi-cycling, with cars being reused two to four times, all contributing to the risk.

New mobility

Arval have an interest in new mobility products with a focus on mid-term rental products, Arval Connect telematics solutions, and products where you pay by the time you have the car.

Arval’s Beckers sees BEVs as indirectly being the catalyst for a whole new suite of customer mobility products. This is linked to changing times following the Covid pandemic with different living and working patterns being adopted. Although we now drive less miles, Beckers points out that we still need cars going forward, especially if we are not based in cities.

With new mobility comes new processes, new platforms and systems, and new people, so is it best to form strategic partnerships in your ecosystems or go it alone which could possibly be the slower option? Arval Beyond – Arval’s strategic plan 2020-25 that was developed before Covid – highlights their way forward in the world of new mobility.

Arval Beyond has four pillars focusing on mobility, electrification, flexibility and connected, and the most important pillar, according to Bart Beckers, partnerships.

Arval Beyond – Arval’s strategic plan 2020-25

360° Mobility: 360° Mobility transforms Arval from a car-centric company into a mobility company. In 2025, 100% of Arval countries will offer alternative and sustainable mobility products or services.
Good for you, good for all: Arval aims to become a key leader in energy transition and sustainability by helping customers to protect the environment and create safer roads. With Good for you, good for all, Arval will have 700,000 electrified vehicles in its fleet by the end of 2025 (including 350,000 BEVs), across all its 30 countries, as well as registering a 35% reduction in its fleet’s average CO2 emissions, and a 10% decrease in its overall accident rate.
Connected & Flexible: Arval is building a simpler and highly connected leasing offer. Based on a combination of new technologies and services, it will enable drivers to enter a new era of mobility with a much simpler driving experience. By 2025, more than 80% of Arval’s fleet will be connected and will offer a wider set of services to make the driver’s life easier.
Arval Inside: Since the creation of Arval in 1989, partnerships have been part of its DNA, starting with banks and car manufacturers, and now extending to other stakeholders. In 2025, 100% of Arval countries will have signed successful partnerships with international or strong local players.

Partnerships are important to Arval; not just distribution partnerships with companies such as JLR but also partnering with fintechs to scale up faster.

One strategic partnership, which has helped Arval to scale up and is complimentary to Arval’s legacy, is RideCell, which deploys next-generation global shared mobility solutions.


When asked which products will emerge as the most important mobility product for the fleet sector by 2025, delegates of the webcast poll unanimously felt that subscription (47%) followed closely by Pay-by-Use (44%) products will be the most prominent mobility solutions in the future.

However, if price is one of the biggest drivers for BEV at the moment, will we see a rise in the premium subscription product, where costs are higher than a regular lease or PCP and not affordable to middle-income customers? Beckers feels that higher subscription costs are the price we pay for more flexibility and an easy-to-understand model which is appreciated from a consumer perspective.

Arval’s Beckers sees us moving into a world of mobility with a combination of subscription and full-service lease/PCP, but not 100% subscription.

The hardest aspect of the subscription model to get right, according to Beckers, is managing utilisation. This challenge is similar to that faced by short-term rental businesses. Going forward, to make subscription a successful mobility solution, customers need to get used to driving different and older cars, while fleet companies need to find ways of gaining higher utilisation from existing fleets. Refurbishment costs also need to be controlled.

Find out more about how Arval plans to thrive in a changing market by reading our review of the Asset Finance Connect Webcast featuring Bart Beckers

Analysis from David Betteley AFC Auto content leader

It was a real privilege to interview Bart Beckers who has enjoyed a long and very successful career in the fleet industry, during which time he has built up an eclectic knowledge of what makes the industry tick. Rather than sitting back and comfortably using that knowledge to maintain business as usual, Bart identified himself as a restless and very forward-looking individual, wanting to use his knowhow and the power of Arval and the BNP Paribas Group to initiate real change in the fleet industry.

Bart acknowledged that there was a continual merging of the traditional fleet and retail automotive markets, but he doesn’t lament that change, rather he sees it as an opportunity to enlarge Arval’s scope of operations, under the global BNP Paribas umbrella of “One Bank Auto”.

A number of factors are helping him to take advantage of the opportunities on offer:

  • Leverage Arval’s inherent ability to deliver in-car driver services using the wide range of telematics-based car derived data.
  • BEVs: Bart acknowledges that they are expensive, but by developing flexible financing models such as pay-by-use and/or short to medium-term rental products, and creative RV setting for lesser known but more affordable brands, they are more easily accessible.
  • Partnership with JLR.
  • Growth of salary sacrifice schemes and the like in various European markets.
  • Increased consumer interest in pay-by-use, subscription and other “new mobility” schemes.
  • Developing partnerships with like-minded Fintechs to provide speed to market for new customer demanded services.

We also talked at length about the elephant in the room for the automotive industry…ESG. Bart discussed his concern that the results of a survey conducted by the Arval Mobility Observatory strongly indicated that customers today are more focused on dealing with their costs increase than other things. Bart and Arval are on a mission to increase electrification of the fleet, and to promote the efficient use of cars by developing new products which reward efficiency.

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European automotive

Finance first: Customer journeys that drive loyalty and increase spend


The most recent Asset Finance Connect webcast, sponsored by FIS, brought together a wealth of auto industry expertise to discuss the finance first concept that provides pre-financing at the start of the customer journey, and both enables sales and ensures long-term customer loyalty.

Carpass is a business concept that pulls together operations, technology and business processes to engage the customer online for finance at the beginning of the car-buying journey and then provide the necessary technology to support that customer in their buying decision regardless of brand.

When developing this finance first platform, Tony Lynch, owner of, asked the question: ‘as a finance company, what comes first – the car or the finance?’

Lynch believes that all car-buying journeys start online and most of those journeys need finance: “As a finance company we have traditionally been an enabler to the motor company, but we should be the customer acquiror, maybe the finance is that important to the customer that they can be pre-approved online for finance and then we’ll help you buy a car.”

There is an enormous opportunity for captives, such as Toyota Financial Services, to play a much bigger role according to Lynch and Toyota Financial Services’ Martin Muessener. Together, they started to realise that if the captive could pre-finance the customer at the beginning of the car-buying journey, they could potentially influence their car-buying decision towards the captives’ brand.

Martin Muessener pointed out that, since 2017, Toyota Financial Services has been observing customer behaviour in Europe regarding finance first. Since 2017, there has been an increase of 15% of car buyers who would prefer to finance first, providing an increasing opportunity to ‘hook’ in the consumer in the finance first phenomenon.

For captives, finance first is a new way of thinking and involves opening a new channel with finance first and direct to consumer. This will enable them to widen their customer base and loyalise customers. The conquest potential to get the customer to change brands leads to future growth.

Nick Brownrigg, CEO at BMW Financial Services Nederland B.V., highlighted that pre-authorising people for credit is not a new concept, but it must be done in an easy manner for customers who strive for ease of use. Brownrigg believes that digitisation in the car-buying journey is extremely important, as is the marketing effort as you still need to drive people to buy and not just simply visit your website.

David Nield sees the different drivers for finance first or car first depending on the confidence of the consumer being able to access credit. Everyone starts in a different place according to Nield, with sub-prime customers starting from what they can finance. The monthly payment is critical at any stage in the journey for the lender and customer from an affordability point of view.

Nield believes that the customer journey should enable the different starting points for customers depending on their needs, but current models don’t operate smoothly and are not customer oriented. As Nield states, “Customers can fulfil so much more of their journey online, a journey that should be customer first.”

Nick Brownrigg agrees that the car-buying journey should be moved to a single digital channel which should be the channel of the customer’s choice, for example, a mobile app.

Adapting technology

Traditional tech systems are built for car first and then finance, according to FIS’s David Woodroffe. Finance first would turn these systems on their head!

The car-buying journey is no longer a linear journey as it was five to ten years ago, according to Woodroffe. There needs to be a workflow reorientation to bring the finance approval to the start of the process at the front of the system. With pre-approval upfront, Woodroffe believes that we need to lessen the burden on the customer at the front-end to avoid a drop-off of customers having to fill out multiple forms. Information capture needs to be streamlined, using open banking services for affordability checks, dynamic pricing and eIDV (Electronic Identity Verification), in order to minimise the friction upfront.

To address the technical challenges presented with finance first, Woodroffe does not see any major problems that can’t be solved by stitching the journey through APIs – opening platforms and distributing capabilities through APIs. While the tech is available, Woodroffe points out that investment is needed to open and share data in the industry and make it accessible to APIs.

Genpact’s Harvey Maddocks sees the finance first conversation lending itself to artificial intelligence (AI). Amar Rana agrees and sees the future use of machine learning to speed up pre-approval and underwriting. AI could be used to collect the missing data, not to make the decision.

As FIS’s David Woodroffe confirms, “the use of data and machine learning is definitely part of the picture moving forward.”

“AI is going to change every aspect of the car-buying journey”

Tony Lynch

Tony Lynch sees AI as a very powerful tool that will change every aspect of the future car-buying journey. When looking at predictability of buying intent, the most basic form of intent is engagement, and the more the customer is engaged the more likely they are to buy.

Lynch believes that AI chatbots are genius at this type of engagement, answering just as competently as a salesperson: “If the success of finance first is based upon the conclusion of the sale, then the AI chatbot is going to be essential for us being able to scale it, especially across multiple markets and regions.”

Changing landscape

In researching and developing the finance first business processes, Tony Lynch found that customers are online for approximately three months browsing for a car. During this time, Lynch feels that finance companies should embrace the finance first initiative by engaging with the customer to provide information early in the journey and build a beneficial customer profile and loyalty over time.

As Lynch states, “pre-approval creates a level of loyalty which persists throughout the car-buying journey,” with the finance company engaging with the customer on the platform and providing a level of support.

“Financing pre-approval creates a level of loyalty which persists throughout the car buying journey”

Tony Lynch

While finance first is beneficial for the customer, is it attractive for the independent and network dealer channels? Martin Muessener sees a potential issue with independent dealers receiving a pre-approved finance first customer, with the temptation for the dealer to turn the customer to their own financing options.

For network dealers, finance first does the ‘fishing’ on the dealer’s behalf, sending them customer leads that they wouldn’t normally get as they are outside of the dealer channel. Customer credentials and shopping behaviour can be shared with the dealer who can then make predictions on how likely the customer is to buy a car, which has the potential to turn into a brand conquest for the dealer and greater customer loyalty.


Finance first does present some challenges, including financing pre-approval without knowing what car it is being used for. This causes problems with current soft search systems that have an auto proposal system which must include a car.

Looking at financing pre-approval, CrediCar’s Amar Rana is concerned as underwriters will need to account for the fact that no car has been chosen at the initial stage. This causes an added complication, especially in the UK when trying to conform to the new consumer duty guidelines as you cannot give the customer a false sense of pre-approval. Rana points out that initial eligibility checks won’t take the vehicle into account but obviously when final financing approval is given, the vehicle will be added to the equation.

Another issue relates to the uncertainty of what finance product the customer will decide on at the end of the journey, as the type of product taken will change the RV. The tech system needs to be dynamic enough to fulfil the customer experience even if they change fields in the finance package.

Prime or sub-prime?

While finance first appears to present a more attractive option to sub-prime rather than prime customers, sub-prime customers are not necessarily the customers that a captive wants. Captives want the prime customers, but finance first is less attractive to them as generally they already know what they can afford and don’t need to get the finance first.

Martin Muessener sees opportunities for finance first in prime customers, especially those who are undecided about the finance product or car, customers who like to be guided and like the approach of curated sales and a premium trusted online service.

BMW’s Nick Brownrigg sees benefits for both prime and sub-prime customers in finance-first. For prime, it gives more value-added, more options and makes the process easier. For sub-prime it can enable you to get a car, based on what you need and can afford. According to Brownrigg, “if you are enabling a customer to make a purchase they need to make, that is the subprime; if you are adding value to a customer who knows they can already afford it by giving them the options or just by making the process easier, that is a prime customer with a good credit rating.”

However, Brownrigg sees that much of the value that is delivered to customers to generate loyalty comes after the point of purchase, over the next two to three years after they have made the financing purchase.

“If you are enabling a customer to make a purchase they need to make, that is the subprime; if you are adding value to a customer who knows they can already afford it, that is a prime customer”

Nick Brownrigg

Concluding remarks

“Finance first puts the customer in the driving seat,” according to Toyota Financial Services’ Martin Muessener. This direct consumer approach provides increased customer convenience, flexibility and freedom. While there is less of a structured sales process in finance first, for practical reasons there is more of a default approach at the beginning of the journey.

While Tony Lynch also sees benefits in finance first for the consumer, where they can see what they can afford, the monthly payment and likelihood of financing approval before moving along the platform looking at a potential car purchase, he also highlights the opportunities for increased sales and customer loyalty for the finance companies.

“Finance first puts the customer in the driving seat”

Martin Muessener
Find out about the finance first concept that provides pre-financing at the start of the customer journey, enabling sales and ensures long-term customer loyalty by reading our Asset Finance Connect Webcast Summary sponsored by FIS

Analysis from David Betteley AFC Auto content leader

This was indeed an extremely lively debate between people nominally with an auto finance related job-title, but with very different backgrounds and journeys to where they presently sit. As could be expected from such a diverse panel, there was not unanimous agreement about finance first, but this simply added to the debate!

As with many of the topics we present at AFC, there is no right or wrong answer; our job is to continuously monitor market developments and provide thought leadership as to the potential drivers our members and listeners need to be aware of.

Similarly, the survey results were interesting in that there was a wide spread of opinions from the delegates. There is clearly some hesitancy to consider that the majority of cars will be sold on-line anytime soon, so this is good news for our dealer colleagues, who now tune in much more frequently to our webcasts!

There was somewhat more enthusiasm for the growth of finance first, but again the survey results could not be interpreted as a “slam dunk” for this innovation.

There was a good debate about whether this is a sub-prime or prime product, but this was summed up well by Nick Brownrigg who explained that for a sub-prime customer it was about basic access to wheels, whereas for a prime customer the dealer/OEM had the opportunity to provide added value services and ensure long-term client retention.

So, I think the key question here is whether finance first is a finance pre-approval, a lead generation tool, or a customer retention policy.

My thought is that finance first should be thought of not as “pre-approval” but “pre-validation” What’s the difference you may ask. I think that for pre-approval, this sits better with a specific car choice when not only can credit be confirmed but a rate for risk model can be applied also.

Pre-validation is a step back from this and it enables the customer to continue the car buying journey with a greater feeling of security that they have the money in their wallet, that in turn enables the seller of the car to significantly increase the likelihood of conversion, and secure a finance contract even when the customer changes his or her mind about what car to buy, and from where.

A lot of talk about journeys. An old boss of mine had a favourite saying, “every journey starts with a first step,” …and Tony Lynch has started the finance first journey and there is no doubt in my mind that he has the skills, enthusiasm and staying power to complete it. Watch this space!

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European automotive
European equipment

How digital business ecosystems are changing the auto and equipment sectors

The concept of ecosystems originated in the geographical world but has traversed to the business and technological environment. As John Murray, Head of Solution Architecture (EMEA) at Alfa confirmed at the recent AFC Winter Conference, “Ecosystems are an environment with a set of rules and a number of participants who collaborate and compete against each other, where ultimately the overall value of the ecosystem is greater than the sum of its parts.”

Over time and following the pandemic, customers have become increasingly competitive and more demanding over what they expect to see in the marketplace, e.g. self-service applications, 24-7 availability as key requirements. Ecosystems answer these customer demands, with strong software providers offering a variety of components that are put together on a single platform which can be flexible, innovative and can adapt to requirements.

Building a digital ecosystem for asset finance is explored in Alfa’s Digital Directions 3 report, which draws on industry experts’ input to understand a future in which technology’s power is channelled not by individual operators, but by many participants, who collaborate in an ecosystem on delivering new value that exceeds the sum of its parts.

“Ecosystems are an environment with a set of rules and a number of participants who collaborate and compete against each other.”


Application programming interfaces or APIs are crucial to today’s digital economy as they are the foundation of many digital platforms, enabling organisations to build and plug-in new products and solutions in their ecosystems.

Digital Directions 3 emphasises the importance of open APIs as “a cornerstone of modern technology” in the way they simplify the process of connecting applications and enable ordered interaction between them.

For example, Alfa can provide APIs, such as to their credit decisioning engine, and clients can connect to these APIs with their own front-end portal. APIs together create an ecosystem that is incredibly powerful.

John Murray noted how Alfa can create direct links via open APIs to specialist products and services which will enrich their customers’ experience, reduce the need for Alfa to develop every element required in-house, and provide access to innovative fintech solutions.

“The system orchestrator plays a key role in making ecosystems deliver what is intended.”

Role of the orchestrator

The orchestration layer of the digital platform brings together all APIs and components, and is one of the most important aspects of the ecosystem for the customer journey.

As highlighted in Alfa’s Digital Directions 3 report, “The system orchestrator plays a key role in making ecosystems deliver what is intended. They are trusted advisors to their customers, charged with handling the complex data sharing, technology selection and value metrics involved in building an ecosystem. They have an overall picture of all the participants in the network, and an understanding of what new functionality is required, who will supply that requirement, and how risk and reward will be shared.”

An orchestrator could take on an advisory and consultancy role focusing on the customer and what is best for them, looking at what could be added to the platform, and then orchestrate what is the correct and best tool for the job.

With industry expertise and customer experience, a company such as Alfa would be ideally placed as an orchestrator bringing its trusted leadership to the ecosystem, forging successful partnerships, and integrating components to make a successful ecosystem. With Alfa’s industry knowledge, John Murray highlights that they can look at what is already available and put the solutions and products together effectively in a business relationship.

John confirms that as an ecosystem orchestrator, “the key thing is to understand the business benefits alongside the technical options that are available.”

Boston Consulting Group notes that, “Orchestrators are the pivotal players and stand to gain significantly as platform-based ecosystems increase market share and eat into the profits of traditional companies.”

“The key thing is to understand the business benefits alongside the technical options that are available.”

Collaborative partners

Whilst not a new business concept, ecosystems are essentially about choosing the right solutions and products and plugging them into a single platform for a seamless customer journey.

Ecosystems therefore need strong collaborations with partners who have a single focus and can deliver the functionality in a solid way. As John Murray points out, Alfa could build each individual function but this could be time consuming, or they could partner with a trusted company with a good reputation who can provide that functionality quickly. Alfa would help choose the best solution with the most flexibility that could add the most value to the ecosystem, while not necessarily doing much – if any – development work itself.

The key benefits when creating partnerships and ecosystems are twofold: (i) speed and improving time to market, so that customers get the solutions quickly; and (ii) reducing risk.

Ecosystem partnership strategies can generate significant value both by growing the core business and by expanding the portfolio into new products and services.

One such integration partnership with Alfa is Tomorrow’s Journey, whose SaaS platform JRNY is purpose-built for subscription and usage-based mobility, and integrates perfectly with the Alfa Systems platform. Tomorrow’s Journey CEO Chris Kirby said, “the customer’s desire for an enhanced digitalisation to plug gaps in their journeys resulted in a necessity to partner with other specialist brands and provide a seamless customer journey.”

But with so many solutions in an ecosystem, which players – large or small – actually benefit from the partnership? Andrew Martin, Chief Data Officer at CrediCar would like to think that everyone can benefit, with large companies, like Alfa, having the flexibility to plug in new technologies and leverage advancements that they can’t or don’t have time to build in-house, while smaller companies can focus on new solutions and technologies and then interface with big players who can plug in their packaged-up solution to the ecosystem.

There are also advantages for business customers who get the benefit of all these varying solutions and products being brought to them on one platform in a seamless journey.

“Ecosystem partnership strategies can generate significant value both by growing the core business and by expanding the portfolio into new products and services.”

Partnership risk

Digital business ecosystems present a number of potential pitfalls as well as opportunities. Working with smaller fintechs, who often need to generate new funding, can be seen as a risk for bigger players in case they suddenly disappear and there is a gap in the platform.

John Murray highlights that companies such as Alfa will ensure that they only collaborate with trusted partners with a successful track record, to ensure that their customer won’t be affected, with any risk being looked at from a business sense (a need to mitigate risk through procurement and due diligence of new partners) and a technological one (cloud offerings have resiliency built in which provides strong backing).

There is also an element of risk for smaller companies who partner with large companies in the ecosystem, as a large player could decide to build the third-party functionality themselves or replace it with a better solution. The use of APIs in a software platform built of many components allows the easy replacement of an individual component when a better one becomes available, making it easier and faster for platforms to evolve and develop.

Alfa’s John Murray points out that major companies like Alfa prefer to focus on the customer and customer journey when providing them with the partner’s functionality. They like to interact with smaller specialised companies as the more ecosystems they can be part of, the stronger the overall solution will be. If they were to create each solution internally, the time to market would be too long so it makes sense to partner with specialists.

Large tech companies no longer have to be seen as a one-stop-shop, and they present the opportunity to plug-in specialised flexible solutions which help to adapt to new customer requirements. In turn, small companies can be integrated to many different ecosystems creating a stronger offering.

Another risk could be identified when smaller companies move between the ecosystems of more than one big player. However, John Murray confirmed that Alfa is happy for their partners to be part of many ecosystems as it makes them stronger. The downside to being exclusive to one ecosystem is that you can only move as fast as that one system, so working with a large number of players allows the smaller company to be functionally stronger and have a wider awareness with new visions from different markets.

“Large tech companies are no longer seen as a one-stop-shop; they present the opportunity to plug-in specialised flexible solutions which help to adapt to new customer requirements.”

For more information on building digital ecosystems in asset finance, download Alfa’s Digital Directions 3 report, which offers insight into the emerging role of technology providers as ecosystems orchestrators, identify various types of ecosystems, and discuss the current opportunities to deploy them in order to meet the needs of the auto and equipment finance industry.

Find out how digital business ecosystems are changing the auto and equipment sectors by watching our Asset Finance Connect Conference Session

Analysis from Andrew Flegg CTO, Alfa Systems

One of the key goals for many of today’s customers and providers is to embed all technology using APIs in a wider digital ecosystem.

Open APIs are a cornerstone of modern technology which simplify the process of connecting applications, and enable ordered interaction between them. Granular, well designed APIs empower organisations to build ever-greater value for their users in less time, and with less investment, than has been possible in the past.

A digital business ecosystem provides cutting-edge capabilities and can be developed by the provider, its clients, or specialist third parties that deliver anything, from state-of-the-art digital engagement channels to innovative, usage-based products.

Finance providers are recognising the opportunities to create new forms of value through partnerships, and collaborating via shared data such as telematics, causing ecosystems to become increasingly popular.

As more participants collaborate, they begin to create a community with a common purpose, which can work together to tackle challenges. Further to this, entire platforms and applications can be fully integrated to deliver new business solutions.

The vision for an open digital platform such as Alfa Systems is to empower customers to leverage the power of these connected ecosystems, which could be through receiving telematics or credit data, or introducing new products or origination channels.

Growing economic pressures, combined with the prospect of businesses facing increased strain on budgets and investments, represent an argument for collaborating with other providers and forming partnerships. These alliances can offer the customer a complete, seamless journey in one ecosystem of specialist modules.

Alfa is therefore exploring more integration partnerships, to satisfy the future needs of the industry, while opening up possibilities for our customers and showing them what is available in our growing ecosystem. Through such collaboration, Alfa can introduce customers to specialist ‘out-of-the-box’ applications in a central ecosystem, providing a managed solution that will save them from having to embark on that journey themselves.

Entitled Building a digital ecosystem for asset finance, Alfa’s Digital Directions 3 Report draws on industry experts’ input to understand a future in which technology’s power is channelled not by individual operators, but by many participants, who collaborate on delivering new value that exceeds the sum of its parts.

In the report, Alfa offers insight into the emerging role of technology providers as ecosystem orchestrators, identifies various types of ecosystems, and discusses the current opportunities to deploy them in order to meet the needs of the auto and equipment finance industry.

Download the Digital Directions 3 Report

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European automotive

The transition to Mobilize: can new mobility finance products deliver a profitable and sustainable future?


Auto companies are increasingly moving away from the traditional car ownership model to more climate-friendly mobility offerings linked to a company’s sustainability strategies. In a recent session at the AFC Winter Conference, the CEO of Mobilize Financial Services UK, Alice Altemaire, and Asset Finance Connect’s auto finance community leader David Betteley discussed the battle of planet versus profit in the motor finance industry and whether car companies have to sacrifice profitable returns for sustainable strategies or is there a way to have both?

Roadmap to green

Many auto and asset finance businesses have a ‘roadmap to green’ highlighting four steps towards large-scale green asset finance:

  1. Leasing ‘green’ assets using a conventional leasing model.
  2. Circular economy options added to the conventional leasing model (e.g. recycling, asset rotation, asset sharing).
  3. Flexible ‘as a service’ solutions for largest customers through manufacturer risk-sharing partnerships.
  4. New funding models (e.g. Solvency II reforms, securitisation, green bonds) to facilitate scaling up of new models.

The right level of regulation is required to support, embrace and enable sustainable innovation. Regulators believe that all businesses need to look at their emissions and how they can be reduced, e.g. work with logistics and suppliers in the value chain who must all work towards net zero. From 2019, large UK companies must report their emissions, try to be more efficient and support sustainability.

Scope 1, 2 and 3 emissions

In order to monitor the carbon emissions of the business world, Scope 1, 2 and 3 emissions reporting is now in place:

  • Scope 1 emissions – direct emissions from owned or controlled sources, e.g. fuel used, air, and business car travel
  • Scope 2 emissions – indirect emissions from the generation of purchased energy e.g. Electricity purchased for use in offices
  • Scope 3 emissions– all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions, e.g. emissions from products used by the company’s customers

As Scope 3 emissions usually account for more than 70 percent of a business’ carbon footprint, it is crucial that companies tackle these emissions to meet the aims of the Paris Agreement and limit global warming to 1.5°C. However, measuring Scope 3 emissions is a challenge.

There are numerous benefits associated with measuring and reducing Scope 3 emissions, where organisations can:

  • assess where the emission hotspots are in their value chain;
  • identify resource and energy risks in their supply chain;
  • identify which suppliers are leaders and which are laggards in terms of their sustainability performance;
  • identify energy efficiency and cost reduction opportunities in their value chain;
  • engage suppliers and assist them to implement sustainability initiatives;
  • improve the energy efficiency of their products; and
  • positively engage with employees to reduce emissions from business travel and employee commuting.

While companies are now recognising the importance of addressing their Scope 3 emissions, action in this area must be scaled up to reach true net zero by 2050.

Mobilize Financial Services started their sustainability journey in 2019 when they subscribed to the SME Climate Hub with a commitment of decreasing their emissions by 50% by 2030 but also to be net zero.

Mobilize successfully monitor their carbon emissions in Scope 1, 2 and 3 and have effectively and efficiently reduced their carbon emissions as well as supporting and influencing their customers and suppliers to be more sustainable.

As Alice Altemaire highlights, changes to reduce Scope 1 and 2 emissions are easy to implement:

  • Scope 1: business mileage and emissions – Mobilize have moved to BEVs, with incentive schemes for employers for EVs and chargers.
  • Scope 2: office premises and utilities – Mobilize have switched electricity to recycled electricity and energy-saving options at their premises (e.g. solar panels). Alice Altemaire points out that while it is easy to spot problems here, it can be difficult to rectify if the building is leased. However, recent contracts have added a clause whereby premises must be net zero. This ease of transition is further reinforced by Vertu CEO Robert Forrester who highlighted in a recent interview that 50% of Vertu’s power will aim to be off grid in the next 12 months, from LED lighting and solar panels.
  • Scope 3: seen as the “most challenging” of the reporting emissions as it is the reporting of the emissions of customers and suppliers. Alice Altemaire believes that businesses must try to influence and support their value chains suppliers to be more sustainable.

Mobilize is aware of reducing their carbon emissions and have invested in Scope 1 and 2 reporting. With this small amount of investment, Mobilize have been able to reduce their emissions and in turn significantly reduce their costs.

With rising energy costs, there is more motivation to save energy which equates to saving money, thus demonstrating that being more efficient leads to costs savings which benefits the business and the planet. Alice Altemaire is a strong advocate that saving the planet ultimately leads to saving money and increased profit: “saving on emissions is saving money and saving costs.”

“Saving the planet is also saving money so there is no excuse not to look at reducing emissions.”

Alice Altemaire

When discussing the emissions of Mobilize’s portfolio, Alice Altemaire highlighted that more emissions are produced in manufacturing electric vehicles (EVs) than ICE cars as the electric vehicle (EV) batteries are being shipped from Asia. Therefore, as Alice notes there is an urgent need to work with the manufacturer to localise battery products and car components to Europe.

Refurbishment and the circular economy

Alice Altemaire is very passionate about promoting the circular economy in the auto industry and refurbishing EVs. Sustainability and circular economy strategies go hand in hand, with cars being the perfect product to be reused, remanufactured and recycled.

“Sustainability and circular economy strategies go hand in hand, with cars being the perfect product to be reused, remanufactured and recycled.”

The circular economy is an increasingly attractive option for automotive players who want to be more sustainable, and shifting to circular manufacturing can open new business models and drive profits.

For example, Renault and Stellantis are both looking at businesses that encapsulate the circular economy. Obviously, decarbonisation plays a role in their plans, but they also have a focus on profits and lowering costs through the circular economy.

The Circular Cars initiative, a collaborative ecosystem-based program led by the World Economic Forum, lists vehicle sharing, smart charging, refurbishing, repurposing, and recycling as effective measures to reduce lifecycle environmental footprints and costs. The project has a clear agenda: to increase the environmental sustainability of mobility.

New mobility services

In the past, car ownership was the predominant model of mobility. However, in recent years with a new younger generation of drivers and increasing urbanisation, the focus has moved away from ownership to usership to mobility as a service (MaaS).

The most popular MaaS models are car sharing and subscription, both providing an alternative to owning or leasing. Most of these MaaS programs offer individuals access to a range of cars with new world tech, with maintenance, roadside assistance and insurance included for an all-inclusive price, lowering the cost and commitment involved in owning a car, and offering a flexible alternative to ownership. People choose subscription primarily for two reasons—either to expand their choices of cars to drive or to reduce the hassle of ownership of a depreciating asset.

Boston Consulting Group1 has highlighted a number of reasons why car subscriptions are gaining consumer interest:

  • Buying a car the traditional way is tedious: Many consumers find the conventional car-buying experience to be a hassle and they dislike the sales pressure.
  • Ownership is less flexible and can be risky: The commitment is long, whether buying the car outright, financing it or leasing, and the residual value loss and risk is off-putting for many car owners.
  • Car ownership is losing its lustre in many parts of the Western world: Ownership for young people is no longer the status symbol or all-consuming aspiration it was just a generation ago. People have a more utilitarian attitude about driving, and studies show that growing numbers of people do not think they need a car to get around.
  • Subscriptions are a low-risk way to try out new brands and BEVs: Consumers who might shy away from new brands or battery electric vehicles are more willing to try one out through a subscription.
  • Subscriptions are an attractive supplementary option for B2B customers: Subscriptions enable business customers, particularly small and medium-size enterprises, to quickly adjust their fleet size based on demand, and react to changing business conditions.

“In the current market, there is no one-size-fits-all mobility solution.”

However, the vast majority of people are still reluctant to move away from the age-old concept of car ownership, especially to a more expensive albeit more flexible option. As Alice Altemaire confirms, people are reluctant to give up the exclusive use of a car but this generational change will happen over a longer period of time. In the current market, there is no one-size-fits-all mobility solution.

In addition to traditional car owners, subscription and car sharing presents a dilemma for car manufacturers as fewer cars will be needed resulting in less CO2 which is good news for the environment, but for OEMs who want to sell more cars, the idea is not so appealing and profitable.

However, Mobilize’s Alice Altenaire is optimistic highlighting that less new cars were sold for the first time in fifty years in 2021-22, but financial companies, dealers and car manufacturers were still profitable, resulting in a very fruitful year. This shows that you can drive value over volume and is a positive sign when you look at the rising costs from technology, with BEVs being more expensive than ICE vehicles.

Mobility solutions are currently not creating much revenue, but utilisation is the holy grail as it leads to less cars meaning less emissions and a value-added product that provides a full-lifecycle of the car.

Alice Altemaire is aware that, while subscription is still minimal at the moment, it is slowly gaining traction, but as she rightly says, “you need to start the journey somewhere and need to have a forefront approach and the integration of working together (manufacturer, engineer, finance company, supplier) will support the global value chain and the customer.”

Looking to the future

Like Mobilize’s sustainability business model, Alice believes that all organisations need to understand the emissions of their own business and start from that point: reduce Scope 1 and 2 emissions and look at how you can support your customers with Scope 3 and any transition. Sustainable future-proof strategies are needed with products for the future.

In the short-term, such incentives are good for everyone’s wallet and in the long-term they are good for the company’s revenue line, but all sustainable forward-thinking mobility solutions are good for the planet.

Planet and profit can perform successfully side-by-side – green strategies that will help the environment are in unison with company profitability, with many customers now looking at the green and ESG credentials of an organisation to determine if they are worthy of their business.

Alice Altemaire’s resounding message at the AFC Winter Conference was that saving the planet goes hand-in-hand with saving money and increased profitability so everyone must act now.


1 Boston Consulting Group article – Will Car Subscriptions Revolutionize Auto Sales? – – July 12, 2021

Find out more about how new finance products can improve our lives, respect the Earth and deliver a sustainable future by reading the analysis of the Asset Finance Connect Conference Session sponsored by Teamwill

Analysis from David Betteley AFC Auto content leader

It’s refreshing to interview a business leader like Alice who really “walks the talk”. Everyone is in a conversation nowadays about saving the planet, but for many that’s just a slogan. However, for Alice and the business she leads it is simply part of the culture…the way that they do business at Mobilize.

There are many examples in the article that detail exactly how Alice is putting the planet first, not allowing any “greenwashing” but making sometimes hard business based decisions to reduce the carbon footprint of Mobilize.

Alice has implemented policies that enable the business to accurately measure their Scope 1 and 2 emissions and has developed strategies to deliver continuous improvement in the overall carbon footprint. This demonstrates real “Environmental Kaizen” if that’s a term that can be used to describe what is being achieved!

Scope 3 emissions are also being closely monitored, even though this is of course a very difficult task. As well as monitoring Scope 3 emissions, Mobilize is providing advice and tools to its customers to help them to move to more sustainable transport solutions using a combination of BEVs; new, shorter term, flexible mobility products; and better utilisation of their existing fleets; therefore, actually reducing the Scope 3 emissions of the vehicles sold by her OEM owner.

Alice recognises that this is a long process and she is keen to emphasise that what has been achieved so far are only the first steps in a journey on the long and winding road to complete carbon neutrality. She recognises that car ownership and/or exclusive access to a car is still important to most people, so the strategies that she is employing take this into account.

I’d like to wish Alice every good fortune in what she is trying to achieve at Mobilize. Her ideas and the solutions implemented so far should act as a blueprint for the rest of the industry to follow.

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European automotive

JBR Capital: accelerating the high-end vehicle financing market


Through a combination of a highly personalised approach and key strategic partnerships and channels, JBR Capital has immersed itself in the high-performance automotive community.

They understand the special relationship and passion that their customers have for their high-end dream cars and see their role as facilitating that dream and passion for luxury vehicles. Through this unique relationship, JBR place the customer at the heart of the business, from onboarding through the entire customer journey.

Chris Seaward, Chief Operating Officer at JBR Capital notes that, “at JBR we understand that the emotion for high-value cars exists with our customers and we are happy to help them achieve what they want to achieve.”

Rapidly developing relationships within their multi-channel network of dealers, brokers, franchises and direct customers, JBR Capital have achieved a reputation within the auto finance sector as the only specialised UK independent lender of high-value cars (from £25k to £750k) in the regulated and non-regulated space.

Building on significant momentum since the business was founded, JBR Capital has accelerated over the last 12 months – 2022 being the company’s most successful year with £279 million in lending alone – surpassing £1bn of lending since their inception in 2015.

Their growing business has seen their workforce rise from five to six ‘colleagues’ in 2015 to over 80 today. The maturing of the company allows them to look ahead and see growth for the future, aiming to repeat another £1bn in lending in just two years’ time by growing business across all channels.

Growth has been substantial and JBR has lofty ambitions. Over the past eight years, JBR Capital have shown that their model works, helping them to weather the economic challenges of Covid, Brexit, interest rate rises and rising inflation over the past few years.

“There is huge opportunity in our core business which we are looking to maximise all of the time.”

Multi-channel approach

JBR Capital operate through a multi-channel network – dealers, broker channel, franchise network, and direct to customer – and are constantly expanding all channels to reach their targets.

While these individual networks are all important to JBR, the strong broker market is the largest distribution channel with business soaring following the Covid pandemic. JBR also see significant future growth from the franchise channel presenting a big opportunity for expanding the market.

JBR works with its loyal introducers to maintain a ‘customer for life’ philosophy. As Chris Seaward notes, JBR’s introducer partners are strategic partners in the long-term vision of the business, and “the relationships with introducers are really important and the backbone of what JBR is built on.”

“Our introducer partners are our strategic partners in the long-term of the business.”

JBR believe that the direct to customer route is a more passive channel for JBR and will increase as the company grows and the brand becomes more visible through a number of initiatives:

  • Tactical marketing and PR strategy
  • Connection with luxury car enthusiasts by partnering with sector organisations and clubs
  • Car shows – supporting the community and demonstrating JBR’s expertise in the sector

JBR Capital’s expertise and knowledge in high-end cars and customers in this niche market is very prevalent and they are seen as the main expert in the field. As Chris Seaward confirms, “As the business grows and becomes more capable and more credible and can deal with larger volumes, we will have an increased appetite to talk to a range of people about where we can help them with financing options.”

JBR see one of their key strengths as continuing to be independent and brand agnostic so that they can serve the whole market rather than specialising on any particular sub-segment.

Product range

JBR offer a limited range of regulated and unregulated products which fit perfectly with their clientele’s financial objectives – fixed and variable rate loans and hire-purchase products (with and without a balloon payment).

New mobility finance solutions including pay-per-use and subscription products are not offered by JBR Capital as they feel that they won’t work effectively in their niche sector and will not suit the needs of their traditional-style customers who, as enthusiasts who want to love and own their car, want the pride of ownership.

As Chris Seaward highlights, “We have a specific niche market of customer who love their cars and love to own them and I don’t see the subscription model coming into this space in the near future.”

Value-added products

Currently JBR Capital do not offer any value-added products, but with a growing client base and a solid foundation, JBR are always interested to explore different revenue-generating opportunities and partners who can complement their existing platform.

However, with only a 5% market share in their current market segment, JBR’s main focus is to grow and increase their market share in the lending space in their core business. In the future, they see a huge opportunity in generating revenue through additional value-added products and partnerships.

JBR have a platform where customers can advertise their cars for sale. This is an additional customer service offering. JBR do not own the cars and do not offer a wholesale stocking facility.

Customer relationships

Digitally enabled onboarding with a human touch

JBR Capital are a digitally enabled lender with a human touch; a business that fully understands the special relationship that their customers have with their cars.

The JBR onboarding process is a mix of manual and digital. While they use digital interfaces and APIs, the key differentiator between JBR and other lenders is that they perform manual underwriting. While they have the ability to have automated decisions as a guideline for underwriters, they also have a manual process so that they can understand the ‘real’ risk and opportunity.

JBR operate a rate for risk criteria where each introducer has a price banding from JBR with a fixed commission.

JBR Capital currently have access to sufficient wholesale funding arrangements to enable them to exploit their growth ambitions and to help them meet their aspirational target of £1bn in the next two years. This lending comes from a number of sources: senior lenders, mezzanine lender and a private facility, and in the future JBR will hopefully look at a public ABS transaction.

Good customer experience

For repeat customer business, JBR will direct the client back to their original source channel to maintain a consistent customer experience and seamless journey. JBR can boast excellent levels of customer retention, especially through their broker and direct channels, with strategies in place to retain customer loyalty.

A key strategic project for the future of JBR Capital, according to Seaward, is a JBR customer portal, enabling customers to access their account digitally and therefore further enhancing the customer relationship.


During the turbulent times of the Covid pandemic, JBR Capital followed the necessary regulations and witnessed a good experience throughout with their customers, resulting in few negative outcomes.

The company offered payment holidays, which had a relatively small uptake of approximately 20% of their book during the peak of the pandemic in 2020.

Seaward highlights the needs during this time to liaise with funders, implement new processes and educate the work force. He believes that learning how to react and re-engineer processes during this time tested JBR as a business, but it was a challenge that provided a good learning experience.

Consumer Duty

At JBR Capital, the customer is at the heart of the business and customer service is particularly important. As such, JBR are effectively adhering to and are fully compliant with the new Consumer Duty guidelines.

According to Seaward, JBR want to fulfil the spirit and letter of the Consumer Duty regulation, with the guidelines embedded in the DNA of the company.

Plans for Consumer Duty at all levels of the business were formed four to five months ago and are now fully implemented throughout the whole business. Raising the standards from TCF, Consumer Duty can be found throughout the entire end-to-end customer journey.

“Consumer duty is in the DNA of the company.”

JBR are proud members of the Finance and Leasing Association.

ESG credentials

JBR have implemented their ESG programme over the last two years, making excellent progress across all divisions.

Launching an industry standard-setting sustainability initiative in 2022, JBR Capital partnered with Carbon Neutral Britain by offsetting 5,000 miles of carbon emissions for each car financed by its clients, greatly reducing the environmental impact of high-end vehicle ownership.

The programme allows JBR to offset the carbon emissions of the first 5,000 miles in the first year of ownership for the client and the client can then sign up to the initiative for subsequent years.

Previously focusing on Scope 1 and 2 emissions where JBR have offset all business emissions, the sustainability initiative looks at ‘sold services’ under Scope 3 emissions by offsetting customers’ carbon emissions, an example of JBR’s responsible lending approach.

Seaward highlighted that JBR have a rightful obligation to do this for their clients and the planet when they finance cars that omit the most carbon. JBR’s initiative is also in line with their specialist financial services private equity investor, Cabot Square Capital, who have a strong demand for ESG strategies in their portfolio companies.

Other ESG strategies include engaging with two local charities – City Harvest and Talent Rise – to stay connected to the local area in which JBR can try to make a difference.

This philosophy continues into the JBR workplace, with employee-led initiatives in D&I, mental health awareness, wellness champions, and various workshops. Seaward emphasised the importance of a positive culture at JBR Capital, in order to retain staff in a niche marketplace and have an engaged workforce, which translates to an engaged customer.

“We’ve tried really hard at JBR to build a positive culture to retain our staff as the niche expertise we have is really important to us.”

Find out how JBR Capital has immersed itself in the high-performance automotive community by viewing their website

Analysis from David Betteley, head of Asset Finance Connect auto finance community

JBR is a great example of a business that really understands its customers, how to serve them and deliver industry leading satisfaction levels.

It has a clear strategy regarding its present-day operational scope and how to develop in the future by growing organically its existing channels to market, whilst at the same time innovating with new products that will first and foremost deliver value to customers, which will then, as a result, grow the revenue and profit base of the company.

The company has a thorough understanding of the challenges, risks and opportunities that it faces and it is managed by a core team of seasoned industry professionals. The go-to market strategy is an interesting mix of manual and digital which enables omni-channel delivery, which in the opinion of the writer will continue to be the preferred method for JBR’s customers to interact with the business.

I was particularly impressed with the engagement of the JBR staff that I met whilst researching for this article. The company has a clear message to its customers and also to its staff. In a people-oriented business dealing with high-net-worth individuals and their cars this has to be the correct recipe!

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European automotive

EV industry: supply issues and China’s dominance in raw materials

Effects of economic and geopolitical uncertainty on the auto industry

As the automotive industry faces a myriad of challenges, from adjusting to the changing dynamics of the economy in the aftermath of Covid-19 and rising inflation and interest rates from the current cost-of-living crisis, to equipping itself for the mobility revolution including connected and autonomous motoring, electrification and zero emissions, Professor Jim Saker, President of the Institute of the Motor Industry (IMI) discusses the economic and geopolitical uncertainty currently facing the sector.

At the Asset Finance Connect Winter Conference 2022, Professor Jim Saker addressed rising concern around the lack of access to raw materials that are vital for the manufacture of batteries. These resources are largely controlled by China. It is the restrictions on access to these resources and our current lack of ready infrastructure for electric vehicles that Saker believes makes the planned ban on manufacture of ICE vehicles by 2030 unwise.

Growing demand for EVs and shortage of raw materials

With the deadline to carbon net zero looming, the number of electric vehicles (EVs) is increasing and manufacturers are racing to secure and strengthen their position in the battery supply chain, from mineral extraction and processing to battery and EV manufacturing.

The International Energy Agency (IEA) has projected skyrocketing global demand for electric-vehicle-sized lithium-ion batteries increasing by over 40 times by 2030.

However, to meet this ever-increasing demand, auto manufacturers are going to have to overcome a big obstacle: where to get enough of the raw materials, which have to be mined and refined, to power the batteries in all those electric vehicles?

Batteries are one of the most important and expensive components of EVs, and over the past decade, China has deftly maneuvered to dominate the electric vehicle supply chain, particularly when it comes to the raw materials – cobalt and lithium.

Chinese companies are poised to meet the surge in demand. In 2021, more than 3 million electric cars were sold in China — making it the largest market for the vehicles — and the country’s battery industry is growing exponentially to keep pace. China’s share of global lithium-ion battery production capacity was 76% in 2020, while the US share was a mere 8%, with China clearly in pole position.

“With the deadline to carbon net zero looming, the number of EVs is increasing and manufacturers are racing to secure and strengthen their position in the battery supply chain.”

China’s dominance in the battery supply chain

China is the world’s biggest market for EVs and, in its quest to be the global leader in electric vehicle manufacturing, China has overtaken other countries as the world’s battery production capital, with Chinese battery manufacturers such as CATL enjoying a meteoric rise in recent years.

Research into the “new energy” vehicle industry (electric and hydrogen fuel cell vehicles) has been funded by the Chinese government with more than $100bn, according to the Center for Strategic and International Studies. But the Chinese government didn’t stop at funding for the cars themselves; as early as 2012, they provided $214m in electric vehicle research funding primarily for battery technologies.

Battery raw materials

The EV revolution is ushering in a golden age for battery raw materials, reflected by a dramatic increase in price and demand for two key battery commodities, lithium and cobalt, over the past 24 months. China currently has the advantage, both in terms of sourcing lithium and cobalt, and the processing of the ‘blue’ metal. The global demand for cobalt is expected to surge to over 200,000 mt per year by 2025, according to Eurasian Resources Group (ERG), a leading producer for battery-use cobalt that is headquartered in Luxembourg.

According to a 2019 working paper – Interconnected supply chains: a comprehensive look at due diligence challenges and opportunities sourcing cobalt and copper from the Democratic Republic of the Congo – by the Organisation for Economic Co-operation and Development (OECD), eight of the 14 largest cobalt mines in the Democratic Republic of the Congo (DRC) are Chinese-owned and account for almost half of the country’s output. And, most importantly, China represents 80% of the world’s production of cobalt chemicals and the vast majority of refining capacity.

According to the OECD paper, “the dominant market position in the refining stage acquired by Chinese companies shows a good capacity to harness the expected rise in battery demand and the increased competitiveness of battery and component manufacturers in China and Korea, in the context of a growing importance of Chinese energy security and the opportunity to leapfrog internal combustion engine vehicles.”

However, more importantly for global car manufacturers, Chinese companies have a controlling share of the market for the processed cobalt that is the critical battery ingredient that powers the majority of electric vehicle fleets

“China has built a wide-ranging lithium battery strategy over the past decade and executed that strategy to powerful effect.”

Chinese companies — often backed by the government — have secured lithium buying stakes in mining operations in Australia and South America where most of the world’s lithium reserves are found.

China’s Tianqi Lithium owns 51% of the world’s largest lithium reserve, Australia’s Greenbushes lithium mine, and, in 2018, they paid approximately $4bn to become the second-largest shareholder in Sociedad Química y Minera (SQM), the largest lithium producer in Chile.

Another Chinese company, Ganfeng Lithium, now has a long-term agreement to underwrite all lithium raw materials produced by Australia’s Mount Marion mine, the world’s second-biggest, high-grade lithium reserve.

In short, China has built a wide-ranging lithium battery strategy over the past decade and executed that strategy to powerful effect.

Chinese dominance in the supply chain is even clearer at the refining stage: BloombergNEF’s (BNEF) global lithium-ion battery supply chain ranking, released in November 2022, shows that China continues to dominate for the third ranking in a row, for both 2022 and its projection for 2027, thanks to continued support for the electric vehicle demand and raw materials investments.

China’s dominance in the rankings shows that refining capacity is just as important, if not more, as access to raw materials and mining capacity.

OEMs moving to China…or not?

So, has China’s leading position in the EV market as well as their dominance in the battery supply chain led to UK and European car manufacturers moving production to China?

The growth in China’s automotive industry was fuelled by European and US carmakers that farmed out the production of an increasing number of their components to China to save costs and establish links with the world’s largest car market.

For example, in 2019, BMW Group announced that it would build future MINI E vehicles in China with Great Wall Motor by building a joint plant in China under the new joint venture, Spotlight Automotive Limited. Recently The Times reported that BMW is set to move production of its electric minis from the UK to China by the end of 2023. However, BMW has denied the report.

Tesla’s factory in Shanghai now produces more cars than its plant in California, with some of the batteries that drive them being Chinese-made with the minerals that power the batteries being largely refined and mined by Chinese companies.

However, China’s dominance over the world automotive market may be about to change. A recent Financial Times article noted that carmakers are beginning to cut ties with China, launching a “quiet yet concerted effort to cut their reliance on China’s sprawling network of components makers.”

The article highlights two key developments that have prompted this move by international car manufacturing groups – (i) China’s zero Covid-19 policy which is causing uncertainty in the industry due to the extended closure of manufacturing plants at short notice; and (ii) a threat to trade caused by a “political decoupling” should there be a breakdown in the relationship between China and the international community.

While foreign car manufacturers will not totally abandon China’s supply chain, they will slowly ease the flow of components from China to other international plants over time. However, the article suggests that foreign manufacturers will retain their connections with the Chinese supply chain purely for the manufacturer of cars that are exclusively for the Chinese market.

Car manufacturers will increasingly be looking elsewhere for car parts and components, while ensuring a robustness and resilience in the supply chain and costs. This particularly applies to sourcing EV batteries, where it will become necessary to strengthen and diversify the battery supply chain away from China, especially where raw materials are concerned.

“Car manufacturers will increasingly be looking elsewhere for car parts and components, while ensuring a robustness and resilience in the supply chain and costs.”

Rising raw material costs

In its Europe Autos 2023 Outlook report, Bloomberg Intelligence believes that rising battery costs and battery demand could be the industry’s next major complication, with escalating battery prices impacting the retail cost of an EV.

The IEA forecasts that the automotive sector will require 50 new lithium projects, 60 nickel mines and 17 cobalt developments by 2030 to meet soaring global EV demand.

In an effort to secure the supply of vital EV battery raw materials, away from China’s control, car manufacturers are beginning to invest upstream in the mining sector, with many OEMs making direct equity investments in mining companies or mining projects, or providing funding to make sure they can accelerate the development of new mines and get security of supply.

While Tesla has led the way in securing raw materials for batteries, several car manufacturers who are increasingly frustrated by supply chain disruption, have stepped up their efforts to secure resources by going directly to producers.

For example, General Motors has agreed to pre-pay $200m to secure supplies from Livent, a lithium mining group in the USA, while Ford is funding Australian Liontown Resources to develop a lithium mine, and Stellantis has taken a €50m equity stake in Vulcan Energy Resources, which aims to produce lithium in Germany.

The automotive industry estimates that the battery accounts for between 40-60% of the price of a BEV, while 60% of the battery cost is estimated to be down to the minerals.

Using technological innovation, car manufacturers are looking for a solution by trying to develop batteries which are less reliant on expensive raw materials such as cobalt, focusing instead on lithium, something Tesla has achieved in its batteries for the new Tesla 3 series.

Selecting alternative cheaper raw materials and battery technologies must be adopted by all OEMs for two reasons, (i) to reduce the cost of EVs, putting them in line with internal combustion engine (ICE) vehicles; and (ii) to move away from raw materials predominantly owned by China and China’s dominance in the supply chain.

“Selecting alternative cheaper raw materials and battery technologies must be adopted by all OEMs to reduce the cost of EVs and limit China’s dominance in the supply chain.”

Find out Professor Jim Saker's rising concerns around the lack of access to raw materials that are vital for the manufacture of batteries by watching his Asset Finance Connect Conference Session
European automotive

Connected car: Customer convenience or commercial reality?


The current business model of OEMs is under threat and they are increasingly turning to connected services as a way of increasing their margin.

Large long-term projects such as the development of fully autonomous cars are no longer the focus. As we have seen in their decision to close down ARGO AI, Ford and VW see semi-autonomy as a bigger opportunity for more immediate revenue.

Cars are increasingly being packed with technology making them expensive to buy, to service and repair, thus resulting in customers choosing the vehicle with the best in-car technology or add-on services and products, rather than a specific car brand.

OEMs are seeking to find ways of using this technology and its associated revenue-enhancing data to increase their income. And while some OEMs are doing this successfully, such as Tesla, traditional car manufacturers are finding the transition from a product provider to a service provider more difficult.

Connected car users

The battle to control connectivity of car users has already been won by technology providers delivering services through smart phones. Consumers increasingly rely on the services delivered via smart phone connections that they consume both inside and away from their cars.

Auto Trader’s Ian Plummer believes that the direction of travel is changing and we need convergence between car tech and phone tech in the car, with partnerships between OEMs and software tech companies. The use of smartphones and applications within the car is a necessity for most drivers who want to be in the car whilst accessing out-of-car experiences via their phone.

Creating two different environments – one inside the car and one outside the car – makes little sense for consumers, and therefore OEMs need to focus on this and provide an “overarching experience” linking the smartphone experience with the car.

“As users we want convenience, we want things to be easy to do from one environment to another.”

Ian Plummer, Commercial Director, Auto Trader

OEMs should therefore focus on partnering with non-car connection providers rather than seeking to develop their own separate ecosystem. Plummer believes that there is a need for OEMs to partner with software companies such as Google or Apple pointing out that, “there is a lot of benefit in manufacturers being realistic about who they should be partnering with.”

At best, if OEMs successfully create separate systems this will create a fractured experience for consumers using one system in their cars and another elsewhere. Plummer feels that there is an increasing danger for OEMs who are trying to do everything themselves as a manufacturer and forcing the consumer in to a situation that isn’t particularly consumer friendly. The more likely outcome is that customers will continue to use their phones to access connected services and connected car alternatives will be ignored.

Car companies should instead focus on the more achievable driver-specific services like parking and insurance, where it makes sense to connect the service to the car and not to the car user.

Plummer believes that people are becoming less concerned about the car brand and spec and are choosing the vehicle with the best in-car technology and add-on services and products. The USP of cars is gradually moving towards the tech within it and the added value this can bring to the consumer.

With this transition in the auto industry, John Ellis sees an opportunity for the OEMs to play a new role as “a trusted broker or a trusted transactable agent, where we think about the car having an account”.

Culture change from product provider to service provider

Traditional car companies are still focused on using additional technology features as a trigger to replace the vehicle and have not yet thought through the implications of a connected service model which allows them to turn new functionality on or off without replacing the car.

OEMS need to understand the difference between this old model of triggering car replacements and the new service-focused model and to think about what this new ecosystem looks like.

“OEMs need to enable the sort of functionalities that will create value for consumers which will make them want to have a long-term relationship with the OEM.”

Ian Plummer

The new consumer-value driven model will put the customer needs at the centre, rather than the need to increase revenue. This model becomes less about triggering a transaction, and more about building a relationship through supplying services over time.

This reorientation from simply selling a vehicle as a product provider to entering into a long-term brand relationship with the consumer as a service provider is something that will not come naturally to the OEM according to Ellis.

John Ellis believes that trust and reorientation are a different proposition for the OEM: “It comes down to the trust and reorientation of just trying to push the new car versus trying to help the consumer move from point A to point B consistently and safely, and with consideration to the environment; that’s a different prospect and a different brand proposition.”

Tesla have achieved this most successfully with propositions that make sense to customers and build trust and loyalty.

Many OEMs have tried to replicate Tesla’s model with subscription offerings, but in a number of cases (heated seats subscription by BMW and key fob debacle by Toyota) this has led to consumer frustration and potential legal action (in the US). Some OEMs need to change direction, with car brands responding if the customer base is loud enough and cohesive enough in what they are saying, according to Ellis.

The auto industry is transitioning to a consumer-driven industry according to Ellis, who believes that profit for OEMs will follow from exceptional value given to consumers from data. Ellis sees the OEMs’ role changing to a service provider, but only if they gain the trust of the consumer.

As Auto Trader’s Plummer highlights, “OEMs need to enable the sort of functionalities that will create value for consumers which will make them want to have a long-term relationship with the OEM.”

OEMs and dealers need to maintain a relationship with the consumer throughout the lifecycle of the car, making the relationship longer and more durable according to Plummer. This relationship will make the consumer want to stay with the brand as it is creating value without charging the customer for it.

Use cases for connected car data

While connected car data has always been used to enhance the safety and the development of the car, recent examples of OEMs trying to monetise data through heated seats subscriptions and to enhance the performance of the car, for example, has not been implemented as a value-add product in a cost-effective way for the consumer.

Car brands have a huge opportunity to sell more cars through value-add products and look at the data from a more positive angle rather than focusing on subscriptions. For example, connected car data can be used to reward safe driving through cheaper insurance.

Connected car data provides an invaluable digital audit trail of a car. This is valuable data for used car valuations and can result in careful car drivers being rewarded and sharing the benefit of higher used car values. As Plummer remarks, “the more data you put into that mix, the stronger the model becomes, the more robust the analysis will be, and the more useful it will be.”

An OEM will struggle to transition to become a data company but there is an opportunity potentially to partner with a data specialist who can provide that data and work out how to share it with the right people, to generate use cases that add value to each of the stakeholders involved. And this will, in turn, add value to the relationship between the OEM and the customer.

As Plummer confirms, “the real opportunity is enabling a broader partnership-based ecosystem, which allows the manufacturers to tap into these use cases in a way that does add value to the consumer. And by doing that, that they will add value back into their own business.”

“The more data you put into that mix, the stronger the model becomes, the more robust the analysis will be, and the more useful it will be.”

Ian Plummer

Concluding remarks

Traditional car manufacturers are prioritising the rapid increase of their margin, and they see connected services as one route to achieving this. However, rather than trying to build new car technology themselves, OEMs should focus on partnership rather than competition with tech companies who are already delivering connected services through mobile devices, which are an invaluable necessity for consumers both inside and outside the car.

The connected car service proposition requires a shift in mindset, however, moving the role of the OEM from a less transactional offering to a role that is more focused on building strong long-lasting customer relationships, with the OEM transitioning from a product provider to a service provider.

The positive use of connected car data – from driving the car safely and in an environmentally friendly manner to reduce the carbon footprint to offering consumers convenience and value-add products such as insurance and higher used car valuations for careful driving – will result in an enduring relationship between the consumer and the car manufacturer.

Find out whether connected cars are a customer convenience or commercial reality by reading the analysis of the Asset Finance Connect Webcast sponsored by Auto Trader

Analysis from David Betteley AFC Auto content leader

As the 19th century turned into the 20th century, car manufacturing companies were moving into mass production and they concentrated on this model up to and beyond the war, making cars, piling them high and selling them to a growing car owning population. This model persists, in a slightly changed format, even nowadays. However, a transition from being simply a manufacturer of mechanical products to being a manufacturer and, at the same time, a tech company is underway.

Technology advances, particularly of late, have enabled the “connected car” to become a reality. Undoubtedly, “tech” and what it enables has the potential to disrupt the current automotive market, more fundamentally and more rapidly over the next few years than we have seen from the last couple of decades.

The start point for connectivity was preventative maintenance, but tech advances and regulation that demands connectivity being constantly fitted to new vehicles, will ensure that by the end of this decade virtually every car produced will be fully connected.

The focus for the OEMs has moved on from simply preventative maintenance to using “connected” to provide customer services, for both safety and convenience. However, this has meant that additional hardware had to be built into the car, increasing the purchase price. The big irony that has transpired is that customers are forced to pay for the hardware installed in their car but they don’t end up owning the data that it produces, or indeed in some cases have to pay extra for the already installed hardware to be switched on!

“Who owns the data” is therefore the new battleground as the industry eventually starts to work out what data is relevant for safety, features, convenience and importantly for on-demand services, and crucially, what data they can monetise.

Customer behaviour and demands are changing, driven by the dominance of the GAFA (Google, Amazon, Facebook/now meta and Apple) Customers are asking how they can use their smartphone to help drive their car. Customers are looking for a frictionless ownership experience, but mis-steps by many manufacturers in the connected journey (e.g. BMW charging for heated seats to be turned on when the hardware had already been purchased by the customer) have resulted in anything but a frictionless ownership experience!

This creates a dilemma for the auto manufacturers. Do they develop their own in-house tech (there have already been some major mis-steps, e.g. VW and the launch of the ID range) or do they partner with the GAFA companies and risk losing their close relationship with the customer?

There is no doubt that monetising connected car data is the new battleground and Asset Finance Connect will continue to feel the pulse on this important topic by continuing to interview industry leaders such as Ian and John in order to keep our auto community “connected”!

Register now for future related webcasts
European automotive

Driving Drivalia’s planet mobility


In the transition from Leasys/FCA Bank, Drivalia was created with the ambition of becoming one of the leading European operators in the mobility sector of tomorrow.

This ambition is summed up in the “Planet Mobility” concept. At the core of Drivalia’s vision is the development of a full range of mobility solutions and customisable plans, from electric car sharing to innovative car subscriptions and rental for all durations. The new company deals with mobility in all its facets, providing innovative mobility plans that combine flexibility, digital use, on-demand approach and sustainability.

Omni channel approach

Drivalia is moving along the path of transition, developing innovative solutions dedicated to green mobility and focusing on electric brands, with an omni channel approach encompassing both a digital and physical presence.

Drivalia has an extensive international presence, with operations in seven European countries (Italy, France, United Kingdom, Spain, Portugal, Greece and Denmark), expanding in 2023 to Germany, the Netherlands, Belgium, Switzerland and Poland. The company’s presence in Europe unfolds through more than 650 Drivalia Mobility Stores, a network of physical outlets (expanding to 1,300 by 2025) where the company displays all its mobility solutions.

Drivalia are also investing heavily in the digital side of the business, despite recent reports that the digital element of mobility solutions has seen a decline with more people walking into physical car branches. Merli understands that post-Covid, trends changed and people wanted to go out and interact with people. However, she feels that their solutions offer the customer a mix of both physical and an easy-to-use digital tool for convenience and speed.

Mobility solutions

Drivalia have integrated their whole spectrum of mobility solutions under one umbrella, which can all be accessed via the Drivalia app.

The most innovative product gaining the most traction, according to Merli, is subscription. This view was echoed by the webcast poll result with 81.4% of participants believing that subscription will emerge as the most important mobility product for the fleet and/or retail sectors by 2025.

Drivalia have integrated subscription with their other mobility products, while some companies are working on a stand-alone subscription model which Merli believes cannot be profitable. Integrating products gives added value and fleets can be used for the changing needs of the customer.

While Volkswagen is reported to be selling its car sharing service WeShare to Miles Mobility, Merli sees car sharing as a “must-have” product that can be integrated with other products. Car sharing fits into Drivalia’s overall concept of mobility solutions. Merli feels that, whilst not as profitable currently, car sharing will be increasingly important from an environmental point of view, especially in cities where it will be harder to own a car.

According to Merli, the benefits for Drivalia in offering the full mobility product range allows their customers to grow with the company, moving between products as their circumstances evolve and their preferences change. Integrating all Drivalia’s mobility products allows the fleet to become more manageable and profitable.

Connected car

Merli sees the connected car as extremely important for providing customer data although sharing data rights must be considered between the OEM and mobility company. Merli sees the benefits as:

  • Using customer data to enhance customer convenience, choice and safety
  • Can offer the best products for the customer’s needs
  • Providing pay-by-use products
  • Can offer additional services

For car sharing, connected car is very important as a full digital experience can be offered to the customer and the car is therefore simpler and more convenient to use. As Merli remarks, “the connected car allows you to serve the customer better.”

“Connected car allows you to serve the customer better.”

Recent bad press surrounding the use of connected car data highlights that there has been a move away from the customer experience and convenience and more focus on how to make money. In New Jersey, USA, a class action lawsuit has even been taken against BMW for charging a subscription fee to receive the core functionality of an option (heated seats) that was installed/ordered from the factory. BMW poured cold water on the criticisms saying that BMW Functions on Demand are [generally] designed to offer premium features through software upload that use data and sensors from factory option hardware already built into BMW vehicles.

Merli believes that you have to find the right balance with connected car data and, when accessing data, this must be enabled in a positive way for the customer and services. Analysis of data is the crucial key which then allows you to adapt products accordingly. Merli feels that the key to being successful is to satisfy the customer, which in turn leads to greater profit. The old saying is ‘sort the wheat from the chaff’ and in this case with the massive amount of data available, deciding what data is relevant is the key.

ESG and the circular economy

FCA Bank want to be a mobility bank for a better planet, linking to environmental support and electrification and other technologies in the market. Drivalia was designed to democratise green mobility, making it accessible to the greatest possible number of people by offering flexible and different solutions. Their financing and mobility solutions maximise the usage of the car, with fleets being reused after their first lifecycle by being re-sold, re-rented, or used for subscription and car sharing, leading to increased efficiency and flexibility.

Drivalia currently see BEVs as core to their sustainability package and product range, striving for all vehicles at Drivalia to be 100% electric by 2030. However, Credit Agricole, their soon-to-be parent company, is investing heavily in hydrogen leading to a possible conflict of ideals. The goal for Drivalia is to sustain any low-impact technology, which Merli feels in the present reality is electric vehicles, with hydrogen possibly becoming reality in the future.

Vision for the future

During this period of rapid change, Drivalia have been listening, first and foremost, to the customer, with continuous customer feedback leading to development and adjustment of their products.

While many auto financial service companies are merging their retail and fleet products, Merli feels that there are different demands and regulation from the two markets. Drivalia offers 20 different subscription packages – to both business and private markets – depending on customer needs. In the subscription market, 20% of business is from B2B while 80% is from the retail market, with more tailored packages for the B2B market and more standardised products for the retail sector.


Drivalia is open to new opportunities and partnerships in their ecosystem.

FCA Bank have been experimenting with Amazon for the past six to seven years. The Amazon partnership has a focus on the retail online channel, with Amazon being widely regarded as customer-focused and oriented and, importantly, trusted.

The CarCloud subscription service has been offered using the trusted Amazon platform, where the customer can purchase a voucher through the Amazon entry point and then go to Drivalia’s online platform to process through their app.

“The business model of dealers will change.”

Merli sees dealers as part of Drivalia’s business model as they move down the transition path. However, do the Drivalia Mobility Stores conflict with the dealer model?

Merli believes that the business model of dealers will change, with a Drivalia partnership for mobility purposes as an opportunity for dealers. In addition to their standard roles, dealers can engage with customers about mobility and become a mobility provider, providing new income opportunities that can help offset those lost as dealers become agents.

As a partner, dealers can share in the profit of re-selling used cars or leveraging in re-renting the car. As part of Drivalia’s business model, dealers can be used to sell different mobility solutions in a physical location, with many customers still looking for a physical connection (meet people, pick up car), with all time-consuming paperwork completed efficiently and effectively online.

Staffing impacts of transition

During a period of transition and change, staffing issues are some of the most difficult to resolve. Is it easier to keep and retrain existing staff or simply recruit new young talent?

“People are the real asset of the company.”

Merli sees “people as the real asset of the company” in a period of change, and strongly believes that you must retain and motivate experienced staff while also attracting new talent from outside the sector with ‘out of the box’ thinking who can bring an innovative valuation of the products.

Merli observes that you need to share the strategy of the company in the short, medium and long term when recruiting new talent, as young people want to be challenged, motivated and successful, all while having fun!

During such a transition, some existing staff will not want to go on the journey towards mobility or will need to be retrained, and while the cost for retraining, especially in economically challenging times, can be expensive, Merli believes that first and foremost “we must invest in people and invest in technology”.

“We must invest in people and invest in technology.”

Merli is convinced that motivational training can come from experienced staff to young people, with motivation shared across the team encouraging greater collaboration amongst staff.

While Merli finds that a good mix across gender is needed to bring your strategy to fruition, there are still extremely low figures of women in the auto industry. Merli feels that this needs to change and a good balance is needed, with women bringing added value to the mobility and financial service areas of the auto industry.

Following the Covid pandemic, working and office dynamics changed, leading to hybrid working conditions for many. FCA Bank are trying to find the right balance for employees to make strategies successful. Merli points to the need for compromise when working in a more flexible way.

Merli believes that happy employees and happy customers leads to success and, while looking at employees’ specific needs, a good mix between home and office working is the best.

“Happy customers and happy employees lead to success.”

So, what motivates Marcella Merli, a successful business woman in a male dominated industry? She goes to work to have fun and pass on her passion for the auto industry to her team, reinforcing her motto of: “Be happy and have fun in what you are doing!”

Find out how Drivalia was created with the ambition of becoming one of the leading European operators in the mobility sector by reading the analysis of the Asset Finance Connect Webcast sponsored by Bynx

Analysis from David Betteley AFC Auto content leader

It was a real pleasure to interview Marcella at such an interesting time in the FCA Bank story. FCA Bank is undergoing a major transformation early next year when Credit Agricole will become the sole shareholder and the launch of Drivalia at the Paris Motor show last month was one major step in that journey.

Drivalia aims to be one of the major European players in the “Mobility” market, whilst at the same time doing this in a more accessible way and also ensuring that everything is achieved sustainably. So, a challenging year or two ahead for Marcella and her team!

Drivalia, as part of FCA Bank certainly have all the products that will be necessary to achieve the objectives of the combined group. FCA Bank with its new found independence can offer a wide range of ownership products direct and via intermediaries whilst Drivalia will offer a full range of mobility solutions, including electric car, car subscriptions and rental for all durations. The new company deals with mobility in all its facets, providing innovative mobility plans that combine flexibility, digital use, an on-demand approach and sustainability.

A further piece of the FCA Bank transformation as outlined by Marcella are Partnerships. FCA Bank has already entered into partnerships with such innovative brands as Tesla and Mazda for 4 wheeled vehicles and Harley-Davidson on two, and on heavy commercial vehicles, joining forces with Ford Trucks. Additionally, and a great example of their innovation, they are partnered with a great trusted brand; Amazon, where customers can become a member of the Drivalia family simply by purchasing a voucher.

However, some partnerships have been lost as the company changes its relationship with Stellantis, but the new found independence will enable FCA Bank to innovate more quickly and develop new relationships with other similarly innovative brands.

Often these corporate changes in direction throw up forseen (and unforeseen) conflicts of interest and we did talk about potential challenges between Stellantis’ plans to set up a multi-marque leasing business in a 50/50 partnership with Credit Agricole and Drivalia. Marcella acknowledged this but with her usual confidence and ambition suggested that there was enough business for everyone!

Turning to their go to market strategy, in addition to the many partnerships they have (and as mentioned above, they are on the hunt for more!) Marcella explained that despite the growth of Drivalia mobility stores, dealers will remain very important to the group as it develops all its new products and delivers them via an omni-channel platform.

Overall, I was left with the impression that FCA Bank and Drivalia are a new combined enterprise in a hurry to ride the wave of new mobility whilst not forgetting their roots and continuing to support also their traditional dealer partners. In closing the interview, Marcella left us with a great quote, that summed up her approach to life in general and business in particular: “Happy customers and happy employees are the key to success”.

I believe that all this is a recipe for success and, with the charismatic Giacomo Carelli at the helm supported by gifted lieutenants like Marcella Merli, FCA Bank and Drivalia deserve to achieve their challenging goals.

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European automotive

Resetting the boundaries: agency, connectivity and subscriptions


Players from all divisions of the auto finance industry came together at the Asset Finance Connect Auto Finance Unconference, sponsored by Sopra Banking Software, to discuss three emerging trends in the shifting auto finance ecosystem – Agency, the connected car, and subscription and new finance products.

As the sessions progressed, it became increasingly apparent that all three trends are interconnected, with common threads running between them:

  • All ways for the OEM to connect with the customers
  • All circle around data and meeting the customer’s needs
  • Changing customer behaviour and expectations is central
  • OEMs are reimagining their role in the value chain but are uncertain of the future. But they are not experts in any of these areas – connected car data, customer relations, Agency, finance products
  • The tech titans are a real threat to the status quo
  • Are we at the crossroads between ownership, usership, membership and Caas?


Many OEMs and prestige car brands have declared that they have started the journey to the Agency model, while value car brands are still watching from the sidelines. A number of pilot Agency schemes have been trialled around the world, including Mercedes in Sweden, BMW in South Africa, and Toyota in Australia and New Zealand.

Agency, “one of the hottest topics in town” according to Elevenci’s Gary Elliot, will result in a fundamental change to the DNA of the auto finance distribution chain, causing a shift in the relationship between customers, dealers and manufacturers.

OEMs are historically good manufacturers but they are not customer service companies. However, they want to be a more valuable part of the chain in the future, and believe that by going direct they will gain increasing interaction with consumers and access to the customer experience and data.

OEMs see many positive aspects to a move to Agency including:

  • Today there are more customers than cars so maximising profit from each sale is critical
  • Distribution costs (including dealer margin) are high and Agency is seen as a way of significantly reducing them
  • The digitalisation of the consumer journey has enabled this development
  • OEM controls the customer journey and re-purchase
  • Further development will see the OEM attempt to control the used car element as well
  • Do OEMs see this as a first step on the new mobility/subscription journey?

Agency was always going to be one of the possibilities for OEMs in the auto industry over time. As one participant commented: “Don’t panic about the Agency model – it’s a natural evolution of the industry.”

There is no “standard” Agency model. Every OEM will do it differently which causes some concern in the industry:

  • Genuine Agency, where the OEM controls the new car sale price, dealer fees, used vehicle trade in value, Financial Services income and any VAP income
  • Hybrid Agency, where the OEM controls the new car sales price, dealer fees, Financial Services income (usually 0% or similar)
  • Limited Agency, where the OEM controls the new car sales price, dealer fees
  • In the Hybrid and Limited Agency models, the dealer can control the used car valuation, finance and insurance, and other add-on revenues

“Don’t panic about the agency model – it’s a natural evolution of the industry.”

Role of the dealer

The ‘bricks and mortar’ presence of the dealer is still an essential part of the sales process for some customers who do not want to buy direct online, and as one participant highlighted, the consumer voice must be front and centre in whatever model is adopted. The retailer currently removes any friction for the customer.

The role of the dealer is still an integral part of the car eco-cycle but in a changing capacity:

  • There is a fixed margin (compare to low/negative margin on some new car sales today)
  • OEM/Captive manages slow moving stock and over-supply problems
  • No requirement for a wholesale credit line, so frees up balance-sheet capacity
  • This balance-sheet capacity can be used to leverage new opportunities presented by the new mobility market, including subscription

One participant observed that automation and new innovations within the auto industry are taking longer than predicted, and “Agency is just another part of that journey”.

The connected car

The connected car was originally designed to bring more services and features to the customer, according to AFC content leader David Betteley, but now it is a ‘cash cow’ which is causing upset amongst customers who are now paying for features which used to be standard.

By 2030, 95% of all cars produced globally will be ‘connected’, but what does that mean for the car industry:

  • The starting point was all about preventative maintenance
  • Now it is about how to monetise the idea
  • What data is relevant and what can be monetised?
  • Can the data be used to deliver features and/or services?
  • Can the data be used to generate one-off revenues or recurring subscription income?
  • Can the data be used as a sales tool (with a digital audit trail)?
  • Who owns the data?
  • Will connectivity be a reason to switch brands or will it become a hygiene factor?
  • BEVs are more connected (7X semiconductors) and may prove to be the catalyst.

Substantial revenue growth is expected from the provision of connected car services which could well be funded by merchant acquirer fees derived by the OEM using in-car payments. The 2021 McKinsey report, Unlocking the full life-cycle value from connected-car data, highlights that connected car services will on average deliver $310 revenue per car by 2030.

There are three stages of (payment) development for the OEM:

  • Car as an enabler. This needs hardware to be fitted to the car and the irony is that the customer pays for the hardware, but it seems like the OEM is presently attempting to monetise the data.
  • OEM as an issuer. Using the car as a payment method. My understanding is that these (so-called interchange or “cut of the transaction” c 1.75%) fees are relatively small (OEM may need to issue a new payment card (possibly OEM branded) in order to make this work).
  • OEM develops a (new) payment method. That is the OEM becoming an “acquirer”. Fees could be in the region of 5-20% of the contract value.

However, there are many obstacles facing the OEMs in their quest for connectivity:

  • Generating a digital audit trail to support RV setting and end of contract repurchase
  • The effect of connectivity on the trade cycle (ability to upgrade)
  • Staying ahead of tech development if this becomes a “brand value” factor
  • Phone vs car (GAFA vs OEM)
  • OEMs developing mutually profitable partnerships with tech companies
  • Dealer networks developing their own “omni-channel” marketing and sale strategies

Phone vs car

A big debate, with strong feelings on all sides, regarding the relationship between the phone and the car, and software companies v engineering companies surrounds the connected car.

At present, the tech giants such as Google and Amazon have a massive lead when it comes to the software needed for the connected car, and the OEMs can’t catch up quick enough as they are a traditional engineering company not a software company.

So, can the OEMs win the battle? The OEMs haven’t invested enough in the software related to the connected car as they can’t see the potential revenue from the data, but they do have the car – so they have the customer. There appears to be a lack of collaboration in the industry in moving forward with the connected car and the endless data possibilities. Should OEMs form strong partnerships with tech companies as that is the way it seems to be moving in other industries? Does the future of the car industry lie with partnerships or a battle between OEMs and tech companies? Whoever ‘wins’ the battle will hold the key to vast amounts of customer data which will be worth billions of pounds.

Monetising data

A vast amount of data is available from connected cars, but who owns the data? The owner could claim the revenue – but until we decide who owns the data, we can’t advance this.

Monetising data and sharing that data can deliver value to all parties in the auto finance industry, for example, through cheaper finance for the customer. Using data, the manufacturer can give the customer what they need and what they want. As Tony Whitehorn commented, “The more data you get, the more flexible you can be.”

“The more data you get, the more flexible you can be.”

Data can be used to understand customer behaviour which is worth endless amounts of revenue. Avenues will open to manufacturers and other sector players to use the data in a very intelligent way, and not just for designing and building cars.

As well as making money from data, the connected car provides another stream of revenue for OEMs through features and financial services on demand. The industry is transitioning to a place where basic spec cars are manufactured with an option to buy add-on features on demand via connectivity and as one participant noted “this is how the industry is planning on making a living.”

However, the key problem for OEMs is that they need their connected services to be customer focused otherwise they appear to be effecting the Ryan-Air-isation of auto. There is a clear problem with charging customers for add-ons which used to be available as standard, without adding some advantage for the customer, such as a cheaper purchase price.

Residual values

The connected car will have a significant effect on residual values in terms of limited car models and telematics data. The data available on the car will mean that a far more accurate record of how the car has performed and been serviced and maintained will be available. It will therefore be easier to set residual values if you have limited car models and can adjust the RV according to the car data.

The telematics data generated from the connected car is also an enabler for new mobility products. For example, if excess mileage is detected through the data, the customer can swiftly be moved to a subscription or pay-per-use finance product which will suit their changing needs.

Subscription and new finance models

New financing models are all about flexibility, but there is a strong correlation between flexibility and price. The more flexible the product, the higher the cost.

And a big barrier to the uptake of subscription is that price is still central to the customer – and they naturally compare subscriptions to other less flexible and, therefore, cheaper ways of paying for the right to use a car. Similarly, sales people are used to selling on price and not on flexibility – and they need to learn how to sell the value of flexibility.

“There is a place for subscription in the auto finance industry, but it needs to focus on consumer demographics and locations, targeting communities who value the change.”

New mobility financing products are therefore only suitable for a very limited and small group of consumers who want the flexibility and convenience which would justify paying the premium monthly payment. This customer demographic is looking for:

  • Shorter term contracts to limit their on-going liabilities
  • All-in payments
  • Pay by use
  • Ability to change the car frequently
  • Always new (ish) cars
  • Easy to hand the car back and walk away
  • Convenient logistics

But all the above are very costly to deliver, with logistic issues being extremely difficult to navigate, only working in certain geographic and demographic locations.

Many unconference participants believe that there is a place for subscription in the auto finance industry, but it needs to focus on consumer demographics and locations, targeting communities who value the change.

It was also highlighted that the subscription model is not suitable for new cars, with a focus on used cars which can then extend the economic lifecycle of the car.

How well has the industry responded to these new products to date?

  • Lot of talk about subscription but very little revenue generation to date
  • Dedicated fleets suffer from low levels of utilisation
  • OEMs and Captives don’t (currently) have the people and processes to deliver
  • Early subscription models offered too much flexibility
  • Current subscription models offer seriously limited flexibility (with some exceptions)
  • It is a premium product currently, e.g. “JLR Pivotal” (£550 joining fee and from £850 (Disco Sport) to £2000 per month (Range Rover) with used cars under 12 months old
  • Logistics still a difficult (and costly) problem
  • Concerns about brand loyalty and customer retention

The increased adoption of subscription and new finance products will result in a number of changes within the industry:

  • Financier to Service aggregator
  • Leasing to Rental
  • Fixed terms to Flexible terms
  • Retailer/dealer to Service provider
  • Intermediary to Direct

Dealers are particularly uneasy about online subscription and how it will affect their ability to sell cars. As mentioned above, with new mobility products comes a shift for dealers to a service provider role for these new finance products and logistics. And this could be part of the solution. In terms of the logistical problems of subscription, dealer groups are well placed in their communities to tackle that challenge.

As with the other two emerging auto trends, would a partnership between OEMs, Captives and dealers solve the problems linked to subscriptions and new finance products? OEMs are once again underestimating the relationship that dealer groups have with their customers.

Resetting the boundaries

The auto finance market was always going to change for many reasons, all of which are so intertwined that it is currently impossible to predict the shape of any new paradigm in the sector.

Agency, connectivity and subscription are all emerging trends in the auto finance ecosystem with fluid boundaries that are inter-twinning and linked through the changing focus of OEMs to reconnect with the customer – an expertise which is not natural to them in the value chain.

Connected car data and reinforcing the customer experience are key to all these new innovations in a changing auto ecosystem of new mobility finance products, transition from ownership to usership to car-as-a-service, Agency and connectivity. But how long before the tech giants stride in with their software expertise and claim the industry as their own or will we see collaboration in the auto industry that resets the traditional boundaries? We will wait and see!

Find out more about the three emerging trends in the shifting auto finance ecosystem by reading the analysis of the Auto Finance Unconference sponsored by Sopra Banking Software

Analysis from David Betteley AFC Auto content leader

There are two threads that link all three subject areas: First, data (telematics output from the car) will provide the OEM with competitive advantage if they can find a way of compliantly using it and, second, the fact that simply making and selling cars isn’t profitable for OEMs.

Manufacturing as a single stand-alone operation hasn’t been profitable for a long time and it has needed to be propped up by aftersales activities and, importantly since the 1970s, the additional revenue generated by selling finance and insurance (F&I).

The new threat is that aftersales income which has helped balance the books, will be severely diluted by the growth of BEVs that require much less service work and consume far fewer spare parts, with the exception of tyres which are today mainly supplied by independent operators such as Kwik Fit.

In response, the major OEMs have diversified to an extent, and have already (pre-BEV) developed large captive operations that in many cases have a balance-sheet size that is more than 50% of the whole group. This has led to many commentators saying that, for example, BMW and VW are banks that happen to make cars.

Perhaps this has led the OEMs to believe that they are now capable of running a service industry as well as a car company?

However, the role of the intermediary (dealer) has perhaps been overlooked in the race to develop Agency as a way of removing cost from the value chain and, at the same time, taking advantage of the new tech tools and customer acceptance of on-line shopping.

Because of these changes, many OEMs feel that the time is right to move to Agency, managing much of the customer journey on-line and removing dealer margin from the equation. Many dealers don’t see a massive change, however, as even today much of their margin when selling a new car is controlled by the OEM in ‘standards’ payments. The issue is, can dealers maintain the same standards and exclusivity of selling one brand if the ‘standards’ money disappears?

Moreover, dealers have developed the skill over many years of selling cars that are difficult to move and those times will return at some point in the future. That’s when the Agency model will be tested, possibly to destruction, when there are more cars than customers and fewer dealers around to sell them!

Continuing the diversification theme, all OEMs have invested millions if not billions in technology both in their factories and the cars they produce. Many of the problems around reliability and production delays have been caused by manufacturers developing their own ‘connected’ solutions; JLR in the former case and VW in the latter.

The big question is, is this a battle that the OEMs can win against the likes of Google (Android), Amazon, Apple and the multitude of tech companies that are competing for a slice of the pie? Or is the solution to partner with one of the foregoing, but then risk losing the intellectual property in the ‘tech’ that is fitted in the car and crucially not controlling the revenue generated by the vehicle.

We are seeing the first roll of the dice with mixed results, for example, the rather cack-handed approach tried by some manufacturers to turn on features (e.g. heated seats) that the customer has already paid for!

OEMs have to decide where the revenue will come from — is it from features such as in the above example or is it services and, if the latter, what services? Is it simply payment services or is it services that will make the customer journey faster, safer and more enjoyable? The big, still unanswered, question is “who owns the data?”

Which brings me on to new mobility products. BEVs have been the catalyst for development. However, the current crop of subscription products suffer from being either flexibility rich and too expensive or flexibility poor and being essentially no different to existing ownership products such as PCP.

The industry has tried to “square the circle” by concentrating on offering used rather than new cars on subscription so they won’t have to price in high initial depreciation costs. This in turn has led OEMs to keep cars on their balance sheets for longer, employing a multi-cycle rather than a single-cycle sales model.

This approach has moved used cars out of the traditional trade cycle and the funding obligation away from dealers to OEMs. It will be interesting to see if this additional balance-sheet exposure for the OEMs will be a burden or a new profit stream for manufacturers.

A closing comment on BEVs: we can all agree that they are the future, but they are still more expensive, putting them out of reach of people on below-average income. It is exactly that section of the population who are most likely to live somewhere that doesn’t have a driveway, meaning that they have to charge at public charging points that cost at least twice the price of domestic electricity.

This, linked with the undeniable fact that government revenue from fuel duty and VAT will have to be replaced (probably) by some form of road pricing, leads me to the conclusion that BEVs may solve one problem while creating a new socio-economic problem for developed western societies.


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