Long term planning is at the heart of our business model. We focus on sustainability so that we can support our customers for the long term.
Efficient, prudent and future-proofed, we've built our financial strategy to last. It embraces:
Our strong performance and consistent customer service during the year reflect everyone's commitment and passion throughout very challenging times. We went into the first lockdown in good financial shape, benefitting from the buoyant used car market in the early part of the year.
In an increasingly uncertain environment for all our customers, we provided automatic six-month lease extensions for those approaching the end of their lease, delivering a reassuring level of security and flexibility. This was received well, and once the market began to move again, we gave people the opportunity to move ahead with their next agreement if they felt safe and ready. The lease extension programme supported our customers and strengthened our rental revenue too. We responded quickly to dealerships reopening and made the most of remarketing opportunities after the first lockdown.
Our commitment to upgrading infrastructure is working very well. It enabled the seamless transition from office to home working and helped us provide a continued service level to our customers. The quality of this service is reflected clearly in customer feedback. The determination to support customers and maintain mobility throughout the year led to our decision to retain our whole team, and we made no use of Government support, such as the furlough scheme. We are truly grateful to each and every one of our people for their tireless work during the pandemic.
In addition to the £50 insurance rebate provided to all our customers, reflecting a reduction in claims while road use was down, we offered further support for those facing financial hardship. On request, these customers could receive an early payment of the Good Condition Bonus, to provide access to cash when people needed it most. This option added a little more financial flexibility without the worry of taking on debt.
Like other businesses, we faced new and serious challenges during 2020. We're confident that our approach helped us to respond to changing customer needs and operational demands. We balanced:
Together, these elements supported good organisational alignment, giving us a blueprint for introducing effective temporary measures, grounded by firm financial and operational control.
Although total revenue was down almost 5% compared with the previous financial year, this reflects the complete market closure experienced between the end of March and June. Once dealerships were open again, we managed a surge in applications and quickly addressed the rise in demand through our effective remarketing programmes, particularly online.
Our robust financial position underpins our ability to keep customer needs at the heart of our decision making.
We aim to maintain the choice of at least 200 cars available funded solely by the customer’s mobility allowance, therefore requiring no more than the customer’s allowance. During the year to September 2020, we exceeded this target with at least 299 models at any one time.
We use commercial contract hire quotations as our benchmark, because they are usually better value than personal contract purchase. This level of affordability is made possible, in part, by our scale and efficiency.
Selling via our online sales channel, mfldirect, provides an effective, low-cost route to market which facilitates the management of our high volume of disposals, and also ensures a competitive sales environment through which we seek to maximise our net return. During the year to September 2020, 77% of vehicles were sold online.
We have strong liquidity, with net £1.3bn headroom on our credit facility. We are confident that we have an adequate contingency to support our needs should debt capital markets be temporarily inaccessible. Also, there are no bond maturities in the next financial year, with the next being June 2022 (£400m).
© Motability Operations Limited 2021
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