Innovative new motor vehicle finance product launched
SIX out of 10 applications for a bank approved hire purchase agreement for a motor vehicle are turned down by the financial institutions.
So, in an effort to get more people vehicles, furniture retailer JD Group and South Africa’s biggest motor retailer have joined forces to launch a new financial product, Ariva, to offer those turned down, finance for a new car.
They will provide a full maintenance rental product specifically targeting the significant number of customers who have been unable to obtain traditional bank finance.
The joint venture, trading under the Ariva brand name, has – in only a few months – already delivered over 160 motor vehicles to delighted customers.
The scheme, which is based on a full maintenance rental concept, will provide fixed monthly rentals inclusive of many of the monthly costs of ownership over the period of the agreement without the associated risks of actually owning the vehicle.
This fixed instalment arrangement is designed to protect customers from unpredictable cash outflows associated with vehicle ownership. However, with the Ariva model, customers are only expected to cover costs such as fuel and oil.
For instance if one wanted to drive a Picanto 1.0 litre on a conventional HP contract, one could expect to pay R3 463 a month. With Ariva on a 54month private lease one would pay a fixed amount of R2 861 per month.
This includes insurance, bank fees, tracking device, service costs, roadside assistance and a saving of R602 a month.
The new scheme will boost South Africa’s yearly passenger vehicle sales by 5%, said Imperial executive director Manny de Canha.
“We aim to expand the number of consumers who can access affordable motoring through an innovative rental product,” said managing director of Liquidcapital [a financial services division of the Imperial Group] David Smith.
“And whilst Ariva is able to offer vehicles in most segments of the market, we expect the sub R150 000 price range to be the most popular.
“Long-term vehicle rentals to private individuals is commonplace internationally, particularly in the US, and is becoming popular in Europe, and we see this as a tremendous opportunity to offer many more South Africans the opportunity to drive a new car,” said Smith.
Ariva offers two product variants: a “Premium” option, which offers comprehensive coverage including full vehicle maintenance and tyres for the period of the contract and a “Lite” option, which covers only the servicing of the vehicle.
Both products include full comprehensive insurance, 24/7 roadside assistance, accident management and a bonus reward benefit.
Smith said: “The fixed nature of the monthly rental which includes insurance, maintenance, roadside assistance and accident management provides a natural inflation hedge protecting the customer from increases in servicing costs and insurance premiums as well as interest rate increases.”
The scale and national footprint of the Imperial dealerships will provide the necessary origination channels and support to customers for this new venture, said Smith.
“The venture is expected to significantly expand the new car base in South Africa and will be beneficial for Imperial, JD Group and, of course, our customers,” concluded Smith.