Finance company keen to build “deeper” relationships with its dealer network following the acquisition of Motorcentral.
Avanti Finance is enhancing the range of services it offers dealers as it seeks to continue growing while the automotive industry navigates its way through a “patchy” spell.
The company has recently acquired the software assets of Limelight Financial Services Ltd, which includes Finance Central, Motorcentral, Need A Car and BuyerScore.
The acquisition will allow it to significantly expand its online offerings and effectively provide dealerships with a “digital finance and insurance manager”.
Andrew Brough, general manager of auto and consumer at Avanti Finance, adds the acquisition is also a chance for the business to increase its dealer network at a time when those businesses are facing challenges.
“The industry is a bit up and down at the moment. The used car market is quite strong for the bigger players because it is all about access to stock,” he told Autofile Online.
“The clean car programme is adding costs for vehicles coming into the country and that’s making it harder for smaller used car dealers to compete for stock.
“It’s definitely getting tougher in the used car space, which is why this acquisition aligns with where we want to be. We now have the ability to help dealers streamline and automate every aspect of their business, including access to stock, as well as providing seamless access to finance.
“As for new cars, we’ve got a number of OEM relationships which are going from strength to strength as they diversify from petrol and diesel into hybrid and fully electric vehicle (EVs).”
Brough, pictured right, notes a number of marques have recently enjoyed sales success with EVs, partly because of the introduction of government rebates for such models, and some challenger brands are selling vehicles in numbers to match their bigger rivals.
“MG and BYD have been appearing in the top six for monthly sales and you wouldn’t have picked that going back a few years,” he adds.
Mark Mountcastle, Avanti’s chief executive, also predicts the general demand for cars will continue at a reasonable level, regardless of some of the present economic headwinds, because of the need to replace vehicles as they age and to meet people’s individual needs.
“I don’t think we will get away from New Zealanders being car users for quite some time,” he continues.
“We’re a small, very dispersed population that doesn’t suit the motor vehicle-sharing model very well, so the individual ownership model we see in New Zealand is likely to continue for the foreseeable future.
“Despite all the rhetoric in the media about the economic stresses around the cost of living, the performance of our motor vehicle books has been very strong. People obviously need motor vehicles and prioritise their commitments in relation to those motor vehicles, and that isn’t going to change anytime soon.
“One of the reasons we proceeded with this transaction was because we think it’s a better introducer offering to support increasing our share of that market.”
Growth strategy
Mountcastle, pictured left, says taking on the assets from Limelight is an opportunity for Avanti to build on its relationships with dealers and the company was also attracted by Motorcentral’s “dealer-centric model”.
“At its core, Motorcentral is an enterprise management software system for motor vehicle dealers, so to be able to support that dealer community more effectively gives us the ability to better understand their needs.
“Part of [this acquisition] is about deepening the relationship with the dealer but also broadening the community of dealers we have that relationship with.”
Brough adds the ancillary services offered by Motorcentral outside of its dealership management system (DMS) were a factor that persuaded Avanti to pursue the deal.
He describes the newly acquired brand as a digital marketer that provides dealerships with plug-ins to websites they want to advertise on, while also offering the Need A Car platform for listings.
“What these assets offer complements our strategy of wanting to grow our motor vehicle finance business by offering services other than finance, which is pretty exciting,” explains Brough.
“A dealer listing platform is an opportunity for Avanti to build up that digital space. One of the things dealers might be asking us is if we’re going digital are we competing with them and the answer to that is an absolute no.
“One of the things that appealed to us was that if a customer jumps on the Need A Car website and wants to apply for finance, even though the dealer doesn’t touch the transaction, the finance sale is still attached to the dealership.
“We didn’t want to go down the path of a merger or acquisition and then have our dealer base leave. Our aim was to create new dealer relationships with those already on the Motorcentral platform and to offer something extra to our existing dealer network.”
He notes the software systems will provide Avanti with more tools to help dealers with advertising their vehicles in different spaces and being able to try to drive traffic back into the dealership.
Brough says early industry feedback about the move has been positive and dealers are upbeat about a company of Avanti’s size and scale sitting behind the Motorcentral platform.
To support the transition, a number of Limelight’s key personnel, including Mena Eskander, Tracy Pennell, Shane Breckon and Mark Greenfield, are joining Avanti.
Limelight’s sales team is also moving over to the finance company and will operate in parallel to Avanti’s existing sales force.
“We’re not looking to merge those two teams; we’re looking to have them collaborate and come up with solutions for the dealer network,” notes Brough. “You’re going to have one that looks after the technology side and you can introduce the finance team should the need arise.”
Digital shift
Mountcastle says Avanti’s increasing shift to digital is designed to get it closer to the decision point at which consumers have a need for finance to support purchasing a product, such as a motor vehicle.
“The best way to do that with the development of digital channels is to be present digitally when the search or purchase process is done, which also happens digitally.
“We have resisted the approach where you interrupt people online with a finance offering that is not relevant to them. By offering finance that enables the purchase of the primary need then you’re providing a value-add to the process rather than trying to force a transaction on somebody that they may not like.”
Brough continues: “The ability for our dealers to be offering finance and a full suite of products on their website, and the Need a Car listing site, where it can be end-to-end linking into a finance company, gives the business manager a qualified lead to discuss with the customer.
“Under our process, the dealer will still have the opportunity to understand the customer’s needs around the suitability of insurance products to provide protection for both customers and the vehicle being purchased.”
Mountcastle adds Avanti sees securing the Limelight assets as a way to be part of a digital service that has the customer – whether that be the purchaser of a vehicle or the dealer involved in a transaction – at its centre.
“The Motorcentral platform starts at the customer end and builds back to the solution, rather than some financing that tries to promote a service that may or may not be required in the end,” he says.
“This is a significant transaction for us and we will be committing a fair amount of resources and attention to making sure that we make it as successful for the wider community that it serves as possible.”
Avanti is the second-largest non-bank lender in New Zealand by assets, loans and market share, according to a report by KPMG. It offers home, personal, vehicle and business loans.
Mountcastle and Brough say if there are further opportunities to acquire other assets or businesses, and they align with the company’s strategy, then it is “open to view”.
Keyword: Avanti making digital moves