How tough is 2012 going to get?
Facetious as it sounds, the answer
would seem to depend on how tough the media can manage to make it
look to consumers.
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To say so conveniently avoids
ploughing through an exhaustive list of economic indicators in
order to offer an official-sounding prognosis, which I admit is
partly a time-saving measure on my part.
However, let’s face it, no matter how
negative or positive I wanted to make that prognosis, I could
easily find the data to back up my point.
Being honest, the process of choosing
the story you want to push and then cherry-picking the facts that
support it is a central part of journalism. It should really be
restricted to editorial writing – ie, comment and opinion pieces
like this one – but I think it’s no secret that agenda-driven news
reporting looms large in the modern media. It’s virtually
ubiquitous in reporting on the economy.
After all, if consumer journalism was
to report the national financial climate from an entirely neutral
point of view, it wouldn’t do much for sales – is anyone really
gripped by headlines like “economy continues to plod along much as
it did last year” or “Nordic countries moving gently along the
right track”?
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By GlobalData(On second thoughts, that last one’s
one of mine from sister title Leasing Life… still, at
least it’s honest.)
The upshot of all this is a very
ironic mess in which one of the greatest things holding back the
economy is the slump in consumer confidence caused by… what
consumers are reading about the economy.
If I can identify any one issue that’s
frustrating all car finance professionals this year, it’s this.
From Gillian Kendall of AUF’s
excellent rallying call in December’s magazine through to the
typically succinct remarks of DSG’s Richard Hoggart and other
participants in this month’s round table discussion on the used car
sector, the challenge of consumer anxiety is coming up again and
again. To many I’ve spoken to recently, it’s a far bigger obstacle
to sales than the actual financial situation of consumers.
It’s the great leveller for both
captive finance providers and independent used car finance houses.
For captives, it will govern just how much incentivisation is
needed to convince customers into new car sales, while for
independents it will govern the amount of effort involved in
convincing customers to come into their local dealership and
replace their aging vehicle.
You’ll see in the round table write up
just some of the strategies lenders are putting in place to
overcome consumer trepidation, but I think the most elegant answer
to the problem was provided by Steve Reynolds of Stoneacre, who
came out with the following in response to the question I started
this column with:
“Well, they’re not riding horses out
there, are they?
Couldn’t have put it better
myself.
To continue on a slightly more
frivolous note, if car finance customers aren’t riding horses, what
are they riding around in?
Apparently, a used Vauxhall Astra or
new Ford Focus, financed to the tune of £6,416 over 42 months and
three days.
Joking apart, this inaccurate
lumping-together of averages draws from a pair of surveys conducted
by the Motor Finance team this month, once conducted
across the underwriting departments of independent lenders and the
other across a handful of brokers.
Both have given us another plethora of
figures to consider, such as the wildly varying amounts of business
underwriting staff are responsible for at different types of
lenders, and the ever-shifting public preference for cars (behind
the obligatory Astra and Focus, that is).
Considering our round table this month
and the sincere feeling in the industry that there are cars out
there to be sold to people who still have jobs at the same wage
they were on when times were not called ‘tough’, I’d be swayed to
agree that the picture of car finance I’m getting from
practitioners is nothing like the pessimistic one you might expect
from mainstream reporting (not that any of the nationals ever write
about my sector).
Throw in the FLA stats that dealers
seem to be writing more finance than ever, with 1.25m cars being
sold through dealer finance in 2011, and people like Kendall,
Reynolds and Hoggart might just be right: Times may be ‘tough’ but
they’re not the apocalypse. Shame that doesn’t quite give me a
headline.
Fred Crawley
fred.crawley@vrlfinancialnews.com
