Get in early is the advice from Tim Looi, Smart Group CEO, for customers planning to order a new novated lease car in 2022. The comments came during an investor briefing when announcing the full year results for 2021.
He explained there’s uncertainty and it varies by make, model and specification. It can also vary depending on the time you ask the car dealer or vehicle manufacturer. There’s still a benefit in ordering a vehicle using a novated lease and salary packaging even if it does take longer to arrive explained Looi.
Investors were keen to understand the potential upside, or downside, of vehicle deliveries because a swing either way could make a big difference to revenue forecasts.
Smart Group reported an increase in operating EBITDA of $103.0 million which is up 8% on the prior year and EBITDA margin improved by 2% to 46%, driven by disciplined cost management.
Profit after tax, as measured by NPATA, was $69.5 million for CY 2021, up 7% on the previous year. This strong result can be attributed to not only ongoing revenue growth, but also the successful implementation of their Smart Future program which is driving improved operational performance.
In the press release Looi said, “We have long recognised great customer service as a fundamental part of ensuring client loyalty and improving customer uptake. I am pleased to see our team members continuing to deliver exceptional client and customer experiences, whilst embracing the improvements being implemented through our Smart Future program.”
“In the first few weeks of trading in 2022, our novated leasing leads are up by 8% compared to the same period in 2021. Our key digital deliverables from Smart Future are on track and our investments in people, processes and technology are delivering results that will continue through CY 2022.”
The Smart Future program has three pillars centred around investing in technology to improve service levels and reduce the cost to acquire new customers.
Looi was asked if novated lease sales leads would continue to grow in 2022, because in 2021 they were still below 2019 levels, and he was hesitate to provide forecasts after the snap lockdowns during 2021 in NSW and Victoria caused a significant drop in new vehicle orders and deliveries in the second half.
The business outlook for 2022 does look positive with Smart Group starting the year with a massive pipeline of new car orders and a sticky customer base of large organisations (returning novated lease customers is 29% of sales leads). The benefits of Smart Future digital program should also be amplified as potential customers gain confidence in 2022.
In 2019, 47% of new customer leads were sourced from on-site customer conversations and education sessions. Overall the number of new leads for novated leasing has declined (due to COVID restrictions and lockdowns), though Smart Group have improved their conversion rate by 4% and has seen digital leads grow significantly in total as a proportion of overall leads.
Smart Group launched a new novated lease website calculator in 2021 which has seen a 40% increase in traffic and 60% increase in sales leads coming from the calculator.
In the 2021 first half results presentation, Smart Group estimated there was 900,000-1,200,000 cars owned by employees of existing customers. If they can direct more of these employees to their new online novated lease calculator, they should continue to see revenue increase.
