“The days of the wholly manufacturer-owned
captive finance model may be numbered.”
This was the view taken by Chris Sullivan,
chief executive of corporate banking for RBS in the UK, at a
conference held recently by wholesale systems provider Sword
Apak.
Go deeper with GlobalData
The comment was made in a discussion on the
future of manufacturer finance programmes, in which Sullivan
expressed his expectation that most manufacturers would soon need
to partner with banks to achieve access to capital at a sustainable
price.
He argued that the cost of funding would only
increase in the years to come, putting margins under pressure and
forcing manufacturers either to think like banks in terms of the
management of their treasury functions, or enter into risk-sharing
partnerships with banking partners in order to provide finance.
Speaking exclusively to Motor Finance,
Sullivan explained: “Of course, every set of circumstances is
unique and a generalisation can’t be made. However, banks are
increasingly acting as both advisors and funders to manufacturers,
and even when manufacturers are providing finance themselves, it is
likely that they are borrowing from a bank to fund that
lending.”
Colin Maddocks, director of network
development for Mazda Europe, agreed that manufacturers had to
begin thinking about more than just “moving metal” in their
provision of finance programmes.
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By GlobalData“In working with bank partners across Europe,
we have had to think about cost and profit implications for them –
so we have learnt to think like a bank,” Maddocks said.
This month’s edition of Motor Finance
presents a wider reaction to this issue, drawn from across the car
finance industry.
