IQ

Insight

Quarterly

Q4/2024

In the UK and across the EU, consumers are increasingly embracing the convenience of online shopping. By 2025, it is predicted that the proportion of all UK retail sales being online, will reach 38.1% – amounting to £152 billion (Statista). This upward trend is helping create greater expectations for online retail journeys that are extending to vehicle buying and financing. Alongside the FCA's 2023 Consumer Duty principles, which set higher, clearer standards for providing fairer digital experiences for consumers, this shift marks a turning point in the automotive industry.

Recent data shows a continuous increase in the number of consumers taking advantage of being able to access detailed information at anytime, anywhere, Completing major steps like vehicle research, comparison and financing applications entirely online, is a trend we predict will expand through 2025. In the last 10 months alone, Codeweavers has seen a 75% increase in mobile Storefront users compared to 2023, with sessions peaking between 6 p.m. and 8 p.m. This growth highlights a clear shift in consumer behaviour during the early stages of vehicle shopping, with the peak showing that many consumers prefer conducting vehicle searches and comparisons after traditional work hours, likely due to the convenience that mobile platforms provide.

As consumers increasingly turn to digital showrooms and platforms for both discovery and point of sale, businesses are under greater pressure to fulfil Consumer Duty obligations and protect buyer interests. Advancing on the previous guidelines to 'treat consumers fairly', businesses are now obliged to 'put consumers' needs first' and promote fairness and clarity. To do that digitally and ensure that all experiences meet the standards, the automotive industry must continue to invest in technological innovation.

Additionally, a recent Court of Appeal judgment on the 25th of October 2024 regarding Motor Finance Commission cases, highlights the growing regulatory focus on transparency in financial services. This ruling reinforces the importance of providing consumers with clear, upfront information about commission structures and willingly offering the insights needed to make financial decisions.

Digital solutions that offer accessible, comparable information then, are key to building consumer trust and ensuring positive outcomes. Created in response to the regulations, Codeweavers' 'Rate 4 Risk' solution provides a transparent view of finance options. Through a streamlined, two-step application journey, consumers can see their likelihood of approval across multiple lenders without impacting their credit scores. This helps them find the right lender with minimal friction, avoiding the traditional waterfall journey where consumers face multiple declines before acceptance.

A key factor in this solution's success lies in its integration with lenders, many of whom have developed soft check APIs that provide personalised rates and eligibility responses. This allows Codeweavers to deliver more accurate finance options to consumers for a smoother, more effective journey. Since its release, 'Rate 4 Risk' has improved one lender's finance submissions by over 64%. Raising their acceptance rate to 85.9%, as well as increasing another lender's rate by 33%. As more lenders adopt this approach, we will see an increasingly seamless online experience, where consumers are more likely to secure finance with their chosen lender on their first attempt.