The UK is seeing unseasonably warm weather for April, and
it looks like the motor finance market too may be experiencing a
minor heat wave at the point of sale, as the traditional buzz of
the March retail peak carried over into the start of this
month.
“Hard work but good results” were the
five words used to sum up the month so far by one national dealer
contact, with continued success in used car finance and increased
PCP penetration being the stories told across the board in
retail.
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For many dealers, the biggest worry is
that those manufacturers who stock vehicles “just in time” for
delivery rather than keeping plenty in store may soon find
themselves tripped up by the sudden halt in production brought
about by the parts shortage following Japan’s tsunami tragedy.
Assuming that all their promised
vehicles arrive, dealers should find the finance on offer at the
moment quite capable of enticing consumers to buy – there are some
relatively low rates around, and not just in the captive
sector.
Still, we are not headed into price
war territory just yet, since the company with the biggest say in
pricing in the UK market – Black Horse – is likely to be setting a
sober lead for its peers to follow.
The landmark point of sale provider is
undergoing another round of restructuring: while it is nothing
compared to the overhaul accomplished by the business in the last
two years, it will still involve four of its business territories
being consolidated into two, and two area directors roles lost as a
result.
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By GlobalDataThe changes, although difficult, will
have been made with the Lloyds Banking Group balance sheet in mind
– as ever, the pressure is on Black Horse to achieve margin rather
than volume targets, and this determination will be seen in its
pricing at the point of sale.
That said, it seems unlikely that any
price increases are possible without a bank rate increase – to its
credit, Black Horse already raised that bar in the aftermath of the
credit crunch, and we have stayed at 0.5% since then.
But what about that bank rate
increase?
The fall in consumer price inflation
to 4% in March, from 4.4% in February, has silenced many of those
betting on an imminent rate rise. Now, most economists are
predicting that an increase in Autumn, as consumers feel the impact
of fuel and commodity prices, is much more likely.
So, business as usual, and a little
more of it – with margins staying reputedly healthy and dealers
seeing sustained good custom past the end of the first quarter,
2011 may not be quite as flat as we thought it was going to be at
the end of last year.
What’s more, new opportunities may
present themselves.
It will be interesting to see if any
other manufacturers take Hyundai’s lead in demanding a much greater
proportion of their cars sold on finance – especially if they are
looking for new finance partners to help them do it.
There is also the matter of Tesco’s
murky search for possible finance providers for its online used car
venture: if that contract materialises, it could bring in serious
volume for an independent player.
As ever though, it’s a question of
wait and see – in the meantime, it looks like the industry should
be making hay while the sun shines.
Fred Crawley
fred.crawley@vrlfinancialnews.com
