Question: What effect has
the internet had on brokers?
Andy Shuter: The
amount of business sourced via the internet has increased annually;
for some companies, it’s now 90% of their trade.
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The industry has done a cracking
job on eradicating “bedroom brokers” – the kind who were
advertising online, doing broker-to-broker business and other such
practices, and frankly, causing a blight on the retail sector.
Now we’re seeing a different kind
of broker using the internet to offer lead generation for dealers,
and the internet has been the biggest single factor in helping them
diversify and offer added value to retailers.
Graham Hill: For
me, the advent of internet sales brings into question the
definition of a broker: there are a lot of people now advertising
on comparison sites, based on their rate alone.
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By GlobalDataI don’t have a website where I
advertise or show my rates. Every job I get is through referral:
existing clients, accountants, solicitors, IFAs. They refer
business to me because of the service I provide, not the rates.
The growth of rate-based online
sales will kill off some of the brokers who compete on price – they
can’t compete because they haven’t got access to the cheapest
rates. If that’s their only criterion, they’ll get killed off.
In my opinion, that’s not a bad
thing. Broker business should be about service for the client.
As such I don’t see that the
internet is going to have a major effect on brokers; if anything it
will improve the situation, enabling us to quote with greater speed
and accuracy, providing a better online service to our clients.
Gerard Moon:
Looking at this for a client, we found that some brokers are
marketing deals superbly online – it draws consumers in. You don’t
see that from a lot of lessors.
Andy Shuter (to Paul
Brotherton): Do you see any value in brokers for the
services they are giving to car dealers? Would you look at them
again?
Paul Brotherton:
Potentially. We took the decision to stop accepting broker business
for the strategic reason that Lloyds Banking Group is a
relationship-based business. We, as an organisation, want to get as
close to our end customer as possible – by their very nature,
brokers were just one more stop between us and that end-user.
I think it’s also fair to say that
the returns from that sector weren’t as good as we would have liked
them to be.
We recognise, however, that there
are some first class operators out there, and they are successful
businesses with or without us.
Colin Tourick: In
a time of capital restraint, when it comes to analysing the ways in
which you take in business, the dropping of the broker channel
causes the least possible pain to your customers. It’s much harder
to turn off a relationship where you have a huge amount of
integration with an end user.
Colin Thornton: When we decided to
stick with brokers, they were the ones with relationships with
customers – the ones who went by the wayside were the ones who just
stuck their rates on the internet.
The internet’s a good tool, but it
will never substitute someone doing a good job.
Question: What
public sector opportunities are there?
Gerard Moon: We’ve
seen a lot of reviews taking place, and we’ve been invited to
tender for some of these projects. It’s all to do with how they can
reduce their costs, and looking at their fleet mix. It’s how they
can actually take costs out and what they can take out in terms of
efficiency. One of the things we’ve done is look into pairing up
with one of the contract hire specialists.
So in our tender process we’re
offering not just our traditional services, but some fleet
management expertise.
We are seeing quite a lot of the
public sector wanting reviews to take place. There’s no doubt
that’s where it’s going.
Andy Shuter:
Getting funding for public sector organisations is not a problem as
it’s seen as a safe bet.
There are two foreseeable problems
ahead, though: namely, government spending cuts and vehicle supply,
again. The police force is having problems getting hold of just
standard Vauxhall Astras.
Buying Solutions is going to review
their framework in October, and a lot of the public sector is
holding out to see the results.
Colin Tourick: The
public sector knows it has to shrink. Many organisations know that
between 30 and 60% of the fleet is sitting parked for five days a
week. They are looking into how technology can be used to reduce
the number of cars, while still having the benefits of a larger
fleet.
Question: What accountancy
changes do you expect to see?
Gerard Moon: I’m
not sure SMEs are going to be affected; it’s the lack of clarity
that is the biggest issue.
The bottom line is that things that
weren’t previously on balance sheets are now going to be on balance
sheets – but at the end of the day, is that going to have any real
effect? It might mean that some bigger companies’ covenants have to
be re-drafted in a slightly different way with their banks, but I
don’t think it’s going to make a huge difference.
Colin Thornton:
There’s no need to panic. There are many reasons why people lease
vehicles, and balance sheet is only one of them. I think it’s an
opportunity because it means that you can talk to a
customer/prospective customer and say, ‘look at the things that are
changing.’ It gives you a hook on which to advise them.
Gerard Moon: It
has to be said, there are some real anomalies in there – deals of
less than 12 months have been excluded, for example. You could find
all sorts of deal structures emerging to keep assets off balance
sheets. Speaking in a personal rather than a professional capacity,
I would quite like to see everything on a balance sheet. It means
that accounts would represent reality much more. It’s the
complexity that is the issue.
