Guaranteed Future Value push for Skoda in Aus
BY MATT CAMPBELL | 2nd Apr 2024
THOSE browsing the Skoda Australia website may notice that each of the vehicles now has a weekly repayment figure displayed alongside it, the result of the brand's renewed focus on being seen as a value-focused choice for consumers, particularly at a time when stretching each dollar seems an inescapable reality.
While Skoda Australia has had national drive-away pricing for some time, the weekly finance payments calculator from Skoda Financial Services gives buyers an idea of not only what their weekly repayments will be, but the figures also point to a ‘Guaranteed Future Value’ deal.
The fine print states: “This is the set minimum residual value of your vehicle which is determined up front by your choice of car, finance product, kilometre limit and term.” Customers enter this data when calculatiing finance payments.
According to Skoda Australia managing director Michael Irmer, this offers a big plus for customers who are concerned about the resale or residual value of their vehicle.
“This is a relatively new concept to the Australian market; it has maybe gone through exactly one buyer cycle so far. We at Skoda, we’re having 20 per cent take-up.
“You might be thinking ‘that’s not much’, but it’s actually quite good, more than most other players. But is there more potential? Absolutely.”
“You might be thinking ‘that’s not much’, but it’s actually quite good, more than most other players. But is there more potential? Absolutely.”
Mr Irmer said that in Australia and other markets, generally speaking, about 70 to 80 per cent of new-car customers are seeking finance in one form or another.
“Car dealership financing is only getting a portion of this in Australia at the moment; it has to do with some of the history and the legacy of that industry which was largely unregulated until recently,” he said of some brands’ tainted reputations around finance offerings.
“Regulation has improved, but there’s a lot of damage done to the perceptions of people. It’s not the first port of call to go to the car dealership for buying finance, because they've been exposed to a lot of bigotry and negative surprises – balloons set too high so that you’re in negative equity. Things like that. Or no guarantee for your residual value. Or (varied percentage interest) rates for risk assessment.
Mr Irmer said the goal with Skoda’s offering in the market is to remove some of the ambiguity associated with these sorts of finance arrangements as has been evidenced in the past.
“We want to take that all away with this program. In the UK, for instance, roughly 70-80 per cent of buyers buy with this program. But in Australia, we come from a different starting point so it will not get to that high level anytime quickly, but we want to evolve it further.”
The critical point on future resale values is prescient, as Skoda will soon launch its first battery electric vehicle (BEV) in Australia – the Enyaq SUV.
Mr Irmer said the brand is conscious of the uncertainty in people’s minds when it comes to BEV resales, and that this program could help those who may be nervous to more accurately forecast the value retention of their asset.
“Where it becomes really important is with electric cars,” he said. “There’s one thing that is unique (compared) to the ICE cars – the purchase price is a bit higher, but it comes with lower running costs.
“But for a consumer, there are two other things which are really important. One is, how is it going to be with selling the car in a couple of years – especially when you see the news coming from the UK, the Americas or from Europe, people are a little bit fearful (of BEV resale values).
“What is it going to be, how is it going to be with the battery and the quick advances in technology?” he posited.
“So then it is a really good thing to have such an asset (as GFV), and such reassurance that somebody taking the leap going into a BEV at least being protected from any surprises there. It’s even more important than in the ICE vehicles.
“Technology advances, and battery (improvements) are much faster at the moment. And that means it maybe also makes sense for many consumers to say ‘I want to be ready to transition maybe in four or five years’, and with the GFV program you can really easily do it,” said Mr Irmer.
