We sat down with Paragon Bank Head of Business Development for Motor Finance, David Wilson to discuss last year’s success in the division and the outlook for 2023.

What are the key updates in the Motor Finance sector recently?

Post-pandemic was an extraordinary time for the market, with constrained new car supply and high demand leading to material car price appreciation and high volumes of used car transactions. This unprecedented scenario could not last forever. Supply issues have eased somewhat seeing values normalise, however, positively, demand has remained surprisingly robust thus far, particularly in the segments of the market where we specialise, such as prestige cars and the leisure market.

Further regulatory changes with the new Consumer Duty are now on the short-term horizon; the industry will embrace these changes and greater customer transparency and understanding should further enhance the credibility of point of sale Motor Finance, which is positive for the sector which continues to be an omnichannel retailing environment.

It’s been a year now since the launch of Battery Electric Vehicles (BEV) products. How has business been for this segment of the market?

We were keen to launch as early as possible in the market to capitalise on consumer demand and provide introducers with a competitive product as the transition gathers pace. Demand has been strong in relative terms given the finite new and used electric car supply. During our first year, we made further enhancements. We now have a product for funding battery-electric LCVs, and we have taken the decision to align our electric vehicle product parameters with those of ICE vehicles to best encourage the transition.

We will continue to monitor the transition, however, with the supply of BEVs relative to the overall car parc still extremely low, question marks over infrastructure, the future VED taxation regime and rising energy prices, the transition is likely to be more gradual than many people first thought.    

Despite the cost-of-living crisis, consumer demand for seems to be holding up.  Why has the market demand persisted during economic turbulence, and do you see this carrying through in 2023?

Despite the turbulence, employment rates remain high and while a new car is often considered a luxury, there will always be a necessity or desire for people to change their vehicles noting that many people may have delayed their typical change cycle post-pandemic as annual mileage rates have fallen. It would be logical to expect wider demand to cool slightly in 2023, however, the year has started strongly, and we remain positive that demand in the areas of the market that we focus on will continue to be strong throughout the year.

Paragon’s Motor Finance division enjoyed a strong 2022. What do you attribute that to?

Like all lenders in the market, we too benefited from high demand post-pandemic. We have a clear focus on the broker intermediary market, and we’ve been successful in continuing to nurture those relationships and support our introducers. We have expanded our sales and services teams and continued to focus on providing a personal service. Additionally, we have expanded our asset reach in some of our specialist markets, such as the leisure channel, and the launch of our electric vehicle product has been well received and assisted growth.

What will Paragon Motor Finance’s focus be for 2023?

Our key focus is to continue to support our intermediary partners through a range of initiatives, plus we have new product developments in the pipeline. Sustainability remains a significant item on the agenda, so we will continue to develop our electric vehicle product as this market grows. Finally, remaining up-to-date with technology is crucial in the ever-increasing digital market, so we are currently exploring options to enhance our systems and increase automation within our processes.