Just in case any of us were beginning to think the market
had run out of surprises by now, the sudden departure of Fortis
from dealer finance serves as a reminder that we are not in a
stable situation yet.
Reading between the lines, it seems
that new owner BNP Paribas Lease Group just couldn’t find a buyer
for its point of sale giant as a going concern. Perhaps they will
have more luck selling its book without the overheads attached to
its sales network.
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In any case, the withdrawal further
underlines just how much empty space there is in the motor finance
industry. While Black Horse showed us last month that it is aiming
at a thoroughly respectable £3bn in retail contracts by year-end,
this is some way shy of the £4.5bn total that some would have
expected from the absorption of the BOS dealer finance
business.
On the other hand, Barclays Partner
Finance has surprised many by looking for a new sales director to
boost its front end, while BMW other-makes finance house Alphera
seems to be making serious inroads into the UK’s smaller dealer
groups. Nevertheless, these still seem to be exceptions to the
rule.
And this is just talking about the
prime end of the playing field. Further down the funding tiers in
the world of near-to-sub-prime, there is still little but the sound
of tumbleweed.
A number of aggressive,
broker-friendly players such as Duncton, ACF, Advantage and
P&CF know exactly how they can till this field profitably, but
even the soundest business models around won’t translate into
volume business without wholesale funding to back them up.
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By GlobalDataThe brokers, needless to say, are
extremely keen to see more capital trickle through to niche
players. Not all of them, however, are sitting and waiting for the
floodgates to re-open. Strong arguments are being made for a new
broker trade body, as those retail introducers who have survived
the drought so far look to become more credible and attractive as a
sales channel.
On the captive side of things, I hear
that some POS providers will be cutting their rates in the fourth
quarter – a strange move, given the volume benefits to be reaped
prior to upcoming VAT changes. Perhaps they are looking to make up
for time lost in a too-cautious first half.
In fact, now would seem like a perfect
time to push higher rates against increasing consumer demand, while
a dearth of competition persists. I don’t think “fill your boots”
is a message that anyone would want to put out to the financial
services market in a post-crisis economy, but there is certainly a
case to be made for the sentiment.
After all, with one usually
non-volatile consultant telling me this month that he expected
“rioting in the streets” over public sector cuts come the new year,
it may not be long before life becomes uncomfortably full of
surprises once again.
Fred Crawley
fred.crawley@vrlfinancialnews.com
