Non-prime finance house Blue Motor Finance has reacted to the
recent credit crunch by retracting its lending business and
increasing the business it proposes to its brokerage
operation.
Managing director John Byrne confirmed the change in strategy,
while stressing that the decision to increase its brokering
business was taken purely because the rise in the cost of funds
made it uneconomical for Blue to continue lending through its
dealer partners.
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“We had made a commercial decision in January to slow our new
business levels, whilst looking for profitable partnerships. Then
in mid-February it became clear that we needed temporarily to stop
transacting any new business on our own portfolio due to the lack
of stability within the financial markets, which had an adverse
effect on our pricing model,” Byrne said.
He continued: “Thankfully, Blue has always maintained a
brokerage business model and when we retracted from lending we were
in a position to switch all of the business into the brokerage.
This has not caused any of our dealer partners any concerns as it
has been a seamless process.”
However, Byrne said, Blue expects to return to lending via
dealers “within the next three to six months – when the market
returns to normal.”
The decision to suspend dealership lending was taken after
face-to-face consultation with key account partners in the retail
sector. Blue has commercial relationships with around two-thirds of
the top 50 dealer groups.
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By GlobalDataIn the meantime, Byrne is bullish about the future for Blue. “We
had a fantastic March, and April is looking to shape up to be even
better,” he said. “We feel the opportunity in the [non-prime
sector] is immense.”
Blue has built up a significant portfolio since its launch in
early 2006, thanks to its focus on non-prime customers, which it
defines as those whose credit is impaired, and who have become
disenfranchised by prime lenders. Byrne explained: “Blue focuses on
customers who have had previous impaired or bad credit, those who
have not become part of the credit cycle or those that cannot
demonstrate stability, but can however show intent – but who do not
fit under the heading of ‘sub-prime’.
“We will get back to normal lending as soon as we can – once the
cost of funds has returned to sensible levels,” Byrne
concluded.
Motor Finance Issue: 43 – May 08
by Jo Tacon ,
Published for the web: May 23 08 15:32
Last Updated: May 23 08 15:50
