By Mike Todd, CEO at Volkswagen Financial Services UK
When I started this monthly column back in January, I suggested that businesses should expect the unexpected in 2022 as the industry continued to navigate the effects of the Covid-19 pandemic.
I’m not sure anyone anticipated the level of flux and instability we’ve since encountered, but those core principles of agility and operational readiness that I mentioned almost 12 months ago have proven to be hugely important.
From the cost of living crisis affecting consumer confidence to Russia’s invasion of Ukraine impacting supply chains, as well as a plethora of political and economic factors thrown into the mix, 2022 has certainly laid down its fair share of hurdles for us to overcome.
But the retailer network has demonstrated incredible resilience to weather this stormy period and with SMMT data showing that car registrations are on the up, it appears the wider industry’s recovery is well and truly under way.
And I truly believe these green shoots of recovery are a direct result of our collective flexibility and resilience as an industry.
It’s unusual for priorities to shift so quickly and so often as a result of developing news stories, but the events of this past year have meant the dynamics of the macro environment have been constantly changing.
Businesses should always be cognisant of changing priorities, however the speed, focus and commitment to pivot to implement new solutions for consumers has been really inspiring.
At Volkswagen Financial Services UK we pride ourselves on putting our customers at the heart of everything we do and, to that end, we have delivered several game-changing propositions for customers.
One such example of living this value is that customers can now buy an All-in package online via the Volkswagen Group brands’ websites as well as through the Retailer Aftersales Portal (RAP) in showrooms.
With this new and streamlined platform in place, customers can purchase an All-in plan in four easy steps from the comfort of their own personal device. Similarly, we listened to stakeholders and removed the need for an eligibility check to be carried out on vehicles for our All-in product.
Being reactive to a shifting landscape is imperative in the current climate and I’m delighted to report these subtle improvements have driven change and outcomes for both customers and retailers.
Our collective ambition has always been to make ownership as easy and simple for as many people as possible and we always welcome the opportunity to work with our network partners to produce compelling finance and aftersales products for customers.
Aside from dealing with market volatility, the other main story of 2022 has been the ramping up of our transition to electromobility.
All available data shows that uptake of electric vehicles continues to gather pace. Our EV Tracker shows the UK is on course to meet its 2032 net zero targets, indicating that EVs have been – and will be – embraced by the nation.
However, as we look ahead to 2023, the industry needs to be instrumental in campaigning for changes in Government policy so that more people feel incentivised and encouraged to make the switch.
Research from Volkswagen Financial Services UK’s data insights team has revealed that nearly two-thirds of consumers would now prioritise a cheaper purchase over one that would benefit the environment – very much in line with established thinking that broader concerns such as sustainability often fall in importance among consumers when tougher economic conditions take hold.
This compromise is also reflected in a growth in the number of people who feel it likely that they will buy a second-hand car: 22% said this was ‘quite likely’ compared with 16% three months prior.
However, what is discouraging is that of those expecting to purchase a second-hand vehicle, a lower number stated that it would be an EV than had been the case in the previous quarter. Indeed, only 15% said it was ‘very likely’ to be an EV purchase, compared with 25% previously.
Another perceived issue for potential buyers is the public charging network. We know that public charging is less reliable, less accessible and more expensive than home charging, and this significant barrier may negatively influence the UK’s rate of adoption as the demographic of EV considerers expands.
That’s why it is more important than ever that we give consumers the economic stability and confidence to make the switch and invest in a greener future.
Overall, I believe 2022 has been a ground-breaking year for the automotive industry. We’ve shown we are capable of handling hugely disruptive external factors whilst maintaining high standards for customers.
The pandemic has undoubtedly influenced consumer behaviour and market trends, but with strong digital solutions coupled with effective traditional channels, we are well equipped to evolve with the times.
I think we’re likely to encounter more periods of uncertainty next year, but this represents an opportunity as well as a challenge and I am really positive about what’s on the horizon for both our industry and Volkswagen Financial Services UK.