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Digital tie-up aims to replace vehicles before end of lease

Date: 20 September 2018   |   Author: Jack Carfrae

SalesMaster and Autofutura have collaborated on a service that attempts to replace vehicles on existing finance contracts with like-for-like models before the end of their term. Jack Carfrae reports.

A new digital service has been launched to offer leasing customers the opportunity to extend contracts with near-identical replacement vehicles before the end of the original term. 

SalesMaster, which specialises in monitoring new and used car stock for manufacturers and dealer groups, has begun collaborating with Autofutura, a company that tracks existing finance agreements and identifies when customers can renew their vehicle with a close replacement, prior to completion of the initial contract. 

The organisations share data across their respective Stockbook and Portfolio 3Sixty platforms. The former conducts "an Amazon-style search of a large portal of stock", according to Chris Stott, SalesMaster's managing director, which comprises new vehicles available for sale, "inbound" models in transit from factories, those in production and used examples. 

Paul Bennett, Autofutura's director of business development, said the latter service analyses "marketing offers and promotions from the manufacturer, the finance company and likely discounts from retailers". 

He added, "We constantly overlay these marketing offers against the customer database that is currently paying monthly for their car, and we look to find the sweet spot, which says 'Chris is driving X and our systems are telling us there's a selection of vehicles that would be of interest. Based upon the specification of his existing car, there are a number of vehicles that would be relevant because they match - or come very close to - the payment he's been making for the last ten, 12 and 16 months.'"  

Customers are informed that they are "in potentially the best position" to replace their vehicle with a similar model and at a similar rate. Bennett also said contracts are typically reset to the original term and, though it cannot be guaranteed, the same deposit would be carried over wherever possible. The software attempts to match the outgoing vehicle as closely as it can, but it also has the capacity to offer equivalents from rival manufacturers when set up to search multiple brands.  

"It will automatically match, in a binary fashion, engine size, transmission, specification and fuel consumption - as many elements as possible. We look to have a 100% match, but the client can say 'Build me opportunities for resolicitation that have a minimum match level of 89%', for example," Bennett explained.

"If you're looking from a leasing company perspective, they can mix and match with any of the brands  they sell. So, if the guy's driving a heavily discounted E220 saloon and ten months down the line that E220 deal is no longer available, but guess what, Audi are having difficulty moving their A6s, and there's a super-special deal, we would cross match all of those vehicles that mirror the requirements of that driver."

Though the companies have historically targeted dealers, manufacturers and their associated finance arms, Stott claimed they had seen "an increase in awareness from the leasing industry", while Bennett said the service could be adapted to corporate customers. 

"There is no reason why a forward-thinking lease company could not adapt the same profile and use of our platform to help them accelerate repurchase. For example, if you've been driving a 3 Series for 16 months and there's 12 months left on the contract, it could be that your leasing company says to the customer 'Are you cool if we flip this deal and provide you and your driver with the same specification of vehicle - but a new one - and simply extend the term back to the original 24 months?'" Bennett said.  

"If we can find a home for that used vehicle and if the leasing company can then, in effect, extend that lease, you've actually got some security for longer-term rentals in the bank, on the proviso, of course, that you can remarket the vehicle you're taking back off that customer at a margin." 

He said the platform could account for rules, such as minimum contract yields, and that, providing it was set up correctly, ineligible customers would not be offered replacement vehicles. Costs vary depending on the business and, for leasing companies, are based on the number of contracts.  

"For a leasing company, we'd probably say 'How many contracts have you got under management?' and they'd say 'We've got 100,000 contracts on our book', so we'd charge a one-time set-up fee of X and a monthly contract-under-management fee of Y," Bennett concluded.