Ariva launches innovative affordable motoring product

By Drum Digital
09 May 2012

Ariva launched innovative affordable motoring product which creates an Opportunity for entry-level buyers to drive away in a new car.

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The group is backed by Imperial and JD Group to provide an affordable motoring solution, which includes affordable fixed monthly rentals including maintenance and insurance provide security for the consumer. Driving a new car just became a reality.

Ariva is pleased to announce the launch of a full maintenance rental product specifically targeting the significant number of customers who have been unable to obtain traditional bank finance.

The Ariva product brings affordable motoring to a greater number of South Africans who will have the opportunity to experience the joy of driving a new car.

Ariva is a joint venture between Imperial (which offers every popular brand of vehicle and accounts for one in five new vehicles retailed in South Africa) and the JD Group (owning well-known brands such as Joshua Doore, Russells, HiFi Corp and Incredible Connection) both highly respected ‘blue chip’ JSE listed companies.

Despite only being in the market for a few months Ariva has already delivered over 160 motor vehicles to delighted customers, most of whom were unable to obtain finance from traditional banks.

The entry-level segment of the vehicle market is traditionally hardest hit when bank lending criteria tightens as evidenced by the activity in the vehicle market since the credit crunch of 2008/2009.

The pressure on affordability and the lower bank approval rates during the financial crisis clearly impacted negatively on the proportion of new entry level consumers who could access credit, thereby reducing vehicle demand in this segment.

Whilst bank approval rates have improved over the last 18 months they have not returned to pre-2008 levels with many potential customers still finding it difficult to obtain vehicle finance.

“We aim to expand the number of consumers who can access affordable motoring through an innovative rental product” says David Smith, Managing Director of Liquidcapital, a  financial services division of the Imperial Group. “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”.

“Remember the freedom you experienced when you owned your first car? That’s what we want to bring to many more South Africans.” says Bennie van Rooy, Group Financial Director at the JD  Group.

“Working with Liquidcapital and the Imperial Group, we will bring a new mobility solution to a large number of South Africans who previously could not obtain finance to purchase a vehicle.”

In reviewing credit applications for vehicle finance, JD Group noted that the applications of more than 60 % were rejected by the traditional banks.

However an analysis of these declined customers revealed that a significant number of these customers “have an acceptable credit risk based on our credit scoring criteria.” says Mr van Rooy.

“We have experience of granting and managing credit in this market segment and are convinced that many customers, who do not qualify for finance in terms of the traditional banks’ criteria, will be suitable candidates for Ariva’s rental  solution. Proven credit scoring techniques are being applied and customers are being assessed on their ability to meet the fixed monthly rentals.”

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. Unpredictable cash outflows arise from unplanned expenses such as repairs and maintenance.

Mr Smith observes that “in this price sensitive segment of the market the key is fixed cost motoring. The rental solution we have designed will provide our customers with fixed monthly rentals, including insurance, which they can build into their budgets”.

Long term vehicle rentals to private individuals is commonplace internationally, particularly in the United States, and is becoming increasingly popular in Europe and we see this as a tremendous opportunity to offer many more South Africans the opportunity to drive a new car.”

Mr Smith further remarks that “the fixed nature of the monthly rental provides a natural inflation hedge protecting the customer from increases in servicing costs and insurance premiums, as well as interest rate increases, making budgeting more predictable and manageable”.

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.

“Not only are the products priced competitively but most clients can also expect to pay less than if they were to finance their vehicles on an instalment sale basis and paying for the extra features themselves” added Mr Smith.

The scale and national footprint of the Imperial dealerships will provide the necessary origination channels and support to customers for this new venture. Mr Smith says “The venture is expected to expand the new car base in South Africa and the simple rental concept in a  ‘hassle free with no surprises’ package offers an attractive value proposition to our customers.”

“I encourage anyone who is interested in driving a new car but is unable to obtain vehicle finance to visit our website www.ariva.co.za where they can complete a simple application form and choose from a wide range of makes and models which are available at over 200 Ariva accredited motor dealers”.

Call             011-663-7018      , send an email to davids@liquidcapital.co.za, CLICK HERE or go to www.ariva.co.za/index.php for more information.

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