Mark Scotney is managing director of Anglia UK, one of the nation’s largest automotive collections agencies. He talks to Christopher Marchant about how 2019 could see wider market turbulence having a direct effect on collections.
In giving his overview of what the year will bring, Scotney’s position is one of guarded pessimism. “In the last 12 months, Anglia has witnessed a steady increase in the volume of default cases being referred by vehicle finance providers and this seems set to continue in to 2019,” he notes.
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“In particular, since the formation of the FCA, there has been a year-on-year growth in the number of customer LTAs. This appears to implies some level of concern over the ability to service existing loans, which could suggest increasing pressure on existing consumer loan portfolios. In terms of the future of collections within the car finance industry, this is heavily tied to factors such as employment stability and the cost of living.”
Options are also weighed in against the nation’s political situation. Scotney says: “With a ‘soft’ Brexit and continued interestrate stability, we are predicting default levels to remain reasonably stable with a modest increase in default during 2019. That is, providing the current climate remains during through the coming year. However, with Brexit negotiations, all bets are off for the collections industry until we know for sure the exact conditions of departure.”
Outside economic possibilities, Scotney is also aware of internal changes in the industry, especially through the use of digital tools, and Anglia UK is reacting accordingly. “We’re midway through rewriting our core architecture,” he explains.
“That’s starting to be deployed out to our various forecourts now, relating to the passive collection of vehicles such as end-of-lease and PCP agreements. We’ve worked to address the balance on the doorstep, opposed to the traditional route of harassing the customer and trying to collect rapidly. Our changes have proved to be the more beneficial approach.”
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By GlobalDataAs the head of a vehicle collections agency, Scotney is able to give particular insight as to which areas of fleet leasing may be struggling, both through analysis and widespread upticks in any types of collections made.
He says: “There has been an increase in the amount of collections in the LCV market this year. That’s largely been off the back of several major corporate failures we’ve been involved in the collections process over, such as Carillion.
“Another area that continues to remain under pressure is the short-term vehicle rental market. This has resulted in a number of large-scale corporate failures, and I can see that continuing throughout the rest of this year and into 2019.”
US DEALERSHIPS
Scotney has business dealings in the US, and spends extensive periods on the other side of the Atlantic interacting with dealerships. Here he has witnessed first hand how the dealership model might transform itself.
For instance, in cities in the US’s south-east, online business Carvana offers consumers the opportunity to buy used cars directly, and collect them at ‘car vending machines’, structures containing vehicles stacked on top of each other.
Scotney also sees large multinationals getting involved over the next 12 months. “Amazon started with books, and now covers so much it could viably go for cars, if you can get past the distribution and supply-chain issues as Carvana has done. Visiting the car dealership isn’t something the younger generation views as exciting or even enjoyable. They’re looking for alternatives, especially through websites they’re already familiar with.
“The explosion of PCP is something that’s linked to this, and whatever criticism it may have to endure, I still think this is a development that is here to stay. With the detachment of ownership in younger generations, you’ve got to a point where it’s not that much of a step further to say: ‘I don’t want to go to a dealership, I want it delivered to my house.’”
From his vantage point, Scotney can see both reasons for keeping calm in the automotive sector and upcoming disruptions.
This is certainly not an industry sector that wishes itself to come across as actively anticipating any rise in collections, but is also aware that this could be very dependent on how the UK economy progresses.
Collections may seem, from the outside, as a sector that is highly attuned to any potential dramas, yet it is also one that continues to preach the desire for stability.
