Vanarama boss boldly predicts five-fold deals growth by 2025

Drivers’ greater willingness to buy online, prompted by the pandemic, suits brokering company well.

Five-fold growth ambitions might seem a bit optimistic for a business operating in the automotive sector right now, given the bleak picture painted by recent vehicle registration figures. But, with an operating model perfectly suited to the changing way people acquire cars and vans, Vanarama looks to be on course for success.

Company founder and CEO, Andy Alderson, predicts that, by 2025, the company will be brokering up to 125,000 deals per year – a significant uplift on the 24,000 expected by the end of this year.

Newcomers in the automotive retail sector such as Cinch and Cazoo, along with moves by some of the big players in the FN50, including LeasePlan and Zenith, are paving the way for a new
online-focused car buying norm, Alderson says.

Vanarama is, essentially, a technology company, harnessing the power of its advanced in-house developed software to aggregate the market’s best leasing deals and present them in a consumer-friendly online search.

Its website attracts up to a million visits a month and offers a wholly contactless process that can see a car deal completed in a couple of minutes.

The consumer offer sits alongside a full fleet management provision, supplying businesses of all sizes with vehicles, telematics, driver training and compliance services, as well as insurance.

Fleets are keenly on Vanarama’s radar, currently making up around 20% of the 50,000 live contracts it has, but Alderson believes the traditional company car market is unlikely to present much growth opportunity in the next 12-18 months.

“We’ll see an increase in the mini fleets. Lots of businesses have been forced to set up home delivery services to keep some money coming in during the pandemic, but, it’s been so successful for them, they’re planning to keep going full-time.”

Andy Alderson, Vanarama

While Vanarama’s fleet volumes will continue to grow, Alderson believes personal leasing will continue to fuel the company’s rapid growth.

One of the company’s clients has just pulled out of a 5,000-strong car fleet and switched its employees to a car allowance.

Alderson explains: “They’ve given us preferred supplier status for staff who’ve got company car allowances because we get the best discounts from the manufacturers and we also get the best rates from the leasing companies.”

He says that, as more drivers exit company car schemes, they are drawn to all-inclusive lease deals that give them a similar experience to what they are used to.

Online focus from the start

Alderson’s career started in car dealerships, where he specialised in finance and leasing. In 2003, while working at a Citroën dealership, he was presented with an opportunity to acquire a batch of Citroën C5 diesels that needed to be registered imminently or they’d have to be crushed due to emissions regulations.

Having looked over the numbers, and factoring in the incentives being offered by Citroën at the time, Alderson realised he could offer the cars at a substantial discount and with interest-free finance for two years, while still making a respectable profit for his dealership.

He decided to take all the cars available, agreeing to a £6 million gamble on 275 vehicles.

In order to shift the C5s as quickly as possible, and with prior experience of selling used cars online, Alderson set up a website and a freephone number then placed a half page ad in the Daily Mail. The orders came in quickly and 90% of the customers didn’t even visit the showroom. All the cars were shifted in just six weeks.

“That was when I knew my future was selling vehicles online and for a monthly payment."

Andy Alderson, Vanarama

Move into leasing

The Vanarama story began a year later, in 2004. Initially specialising in selling used cars online, once Alderson had built up enough of a trading history to attract the attention of leasing companies, he set out to broker deals on vans and pick-ups.

“At that point, commercial vehicles were easier to sell than cars online,” says Alderson. “Car buyers were still very emotionally attached to the type of vehicle they drove and its specification.

“The van customer knew they wanted a Transit-sized vehicle, but it didn’t have to be a Ford Transit. It could be a Vauxhall Vivaro, a Renault Trafic or a VW Transporter.”

This meant Alderson and his team could find vehicles that were best suited to a customer’s needs and budget, therefore offering the best deal, rather than trying to find something in a particular colour or specification.

“Now customers talk about costs,” says Alderson. “60% of the queries on our website start with ‘what can I get for £300 or £400 per month?’. So that conversation around ‘what type of vehicle do you want’ is now much more about ‘what can I get for my budget?’.”

Switching from vans to cars

It wasn’t until 2018 that Vanarama took the decision to focus more actively on car leasing. Until that point it had largely entertained enquiries from existing van customers who wanted a good deal on a personal car or some for their business.

While he acknowledges the pandemic has led to a surge in online car buying, Alderson believes it has only accelerated a trend already underway.

An Auto Trader car buying report in November 2018 found that 85% of people were dissatisfied with the traditional car-buying experience.

“What happened during that time was that more and more people started buying vehicles online. They didn’t like the time it took to drive around dealerships, collecting prices and comparing specs, the four-hour grind of negotiating the price – that was 2018. I think at that point about 16% of people said they would be happy to buy a car online. Because of Covid, that number has now gone up to nearly 60%.”

Andy Alderson, Vanarama

This year, Vanarama expects to broker 24,000 deals, that’s double what it managed in 2019 – highlighting the strength of this emerging market.

Alderson says: “Selling used cars online has always been the more difficult one, because the problem for used cars has always been that, until you see it, you don’t really know what the condition is. You can have two used cars with exactly the same mileage, but they can be very different.

“What’s happening now is you’ve got the likes of Heycar, Cinch and Cazoo throwing so much money at marketing, it normalises buying everything online and it certainly makes it much easier to sell new cars online.”