Car subscription software provider Loopit is witnessing increased demand from retailers looking at alternative revenue stream solutions for their used car inventory.
Executive chairman of Loopit UK Andrew Mortimer (pictured) said “We are starting to see a large spike of enquiries from forward thinking dealerships looking at the subscription marketplace. They are assessing the merits of car subscription as a way of turning their inventory into a continuous revenue stream and also as a means of attracting new consumers.”
Recent figures from the Society of Motor Manufacturers and Traders (SMMT) showed a 5.1% increase in used car sales in Q1 2022, versus the same period in the previous year, yet there are indicators that suggest the used car bubble is starting to deflate.
Despite a 5.1% increase for the quarter, the month of March saw a decline of 6.8%. Some major used car retailers are reporting an easing of residual values coupled with economic headwinds such as rising inflation, interest rates, and energy bills.
Many used car retailers face “critical” business conditions as unprecedented market turbulence and unpredictability continue to take hold, according to Motorpoint CEO Mark Carpenter.
Loopit’s cloud-based end to end software solution allows car dealerships to offer car subscriptions through a recurring business model. Since launching in Australia in 2019, the business now powers more than 80% of the Australia and New Zealand subscription marketplace.
Mortimer said: “Our research shows that consumers are starting to demand more flexibility, but still at a competitive price. Younger consumers especially are seeking access over ownership meaning that they want to change their car to suit their ever-changing needs. They are finding long finance agreements such as PCP and Leasing as being too restrictive.
“Similarly, we are finding that dealerships want to mitigate against the potential of residual value reductions and also want to reach new audiences.”
Car subscription provides lower upfront costs compared to traditional car ownership, the ability to frequently change models, and many typical costs of ownership, such as service and maintenance, are included in the single monthly cost.
Mortimer added “Many PCP consumers approaching the final year of their agreements currently find themselves with substantial positive equity. Many are seeking an EV as their next car. It is easy to see the appeal of selling their car now to release equity and switch to subscription whilst they experiment with the new technology or even wait for their new car to be delivered. Dealers equipped with our software are in a great position to capitalise.”