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Close Motor Finance and DSG
set to benefit from gaps in new markets, report Claire Hack and
Fred Crawley.
Scotland and Northern Ireland look set to
provide important business opportunities for motor finance
companies in the next year and beyond.
Close Motor Finance, whose main base is in
Doncaster, is about to set up shop in Northern Ireland, while motor
finance broker DSG Financial Services is looking to conquer the
Scottish market. Last month, motor and asset finance leader,
Ignition Credit, announced plans to launch a business in Devon.
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By GlobalDataBoth regions are characterised by a relatively open
marketplace with a general lack of competition and an opportunity
for both companies to write high volumes of business outside
England.
Much will depend on the speed of initial growth in
the regions, but both DSG and Close say they are confident they can
prosper in their target areas.
Bright possibilities
The future is bright at Close Motor Finance
as it prepares to branch out in Norther Ireland, according to
deputy managing director James Broadhead.
Three new account managers were put in place in
April and will divide coverage of the six counties, as well as
Greater Belfast, among them.
Broadhead, who has been with Close for the past 11
years, is heading up the Northern Ireland move, following a number
of amalgamations between competitors there.
“Bank of Scotland Dealer Finance [formerly Capital
Bank] merged with Black Horse and NIIB is now part of the Bank of
Ireland,” he said. “We feel we can offer some value to the
dealers.”
The decision was aimed at opening the door for
Close to “an ever-increasing number of dealerships” and will see
the company working with dealers in their local areas.
It also followed numerous direct enquiries from
dealers in Northern Ireland, Close said.
Broadhead added: “We’ve got three people on the
ground that handle deals on a local basis. It is an opportunity for
us to offer dealers something they might not be getting at the
moment.”
The company does not use automated systems for
underwriting, Broadhead said, and is not credit score-driven.
“There’s a niche in the market for somebody
prepared to work on a more personal basis,” he said.
Close’s main competitors in Northern Ireland are
Black Horse, Santander and NIIB, according to Broadhead.
“It is a bit of a sparse marketplace for motor
finance companies at the moment, so we feel it is an opportunity
for us to do some business,” he said.
“The competitive landscape was fairly crowded 24
months ago. There were a lot of people in the market and it was not
somewhere we thought we could write high enough volumes to justify
a team of people there.
“That’s changed now and we have the opportunity to
write significant volumes of business.”
In the long-term, the company plans to open a new
branch in Belfast, but Broadhead conceded this would depend on how
well the move into Northern Ireland goes.
He said: “It would be great but it depends on how
quickly the business grows – it’s still very early days. It’s a
long term goal.”
But he added he was optimistic as 2010 has been
successful so far and the rest of the year looks promising.
He said: “So far, it is looking extremely good and
we are expecting a good 12 months.”
Introducers left out
However, Close has confirmed it will not be
dealing with brokers in Northern Ireland, at least for the moment,
meaning it will not be offering respite to embattled firms
there.
Introducers have been suffering in Northern Ireland
with a diminishing number of funders and will continue to have few
places to turn for now.
Indeed, the last few months have been marked by
exits from Northern Ireland, with Bank of Scotland confirming it
was stopping leasing business there, while Lombard Ireland axed
more than 100 jobs in the region in December last year.
Bank of Scotland’s departure saw a total of 750
jobs lost and was coupled with the closure of its 44 Halifax retail
branches in Northern Ireland.
Lombard is now the only volume funder for many of
the brokers working exclusively in the region, leaving it free to
set its pricing as it sees fit.
In November 2009, Barclays was said to be
recruiting someone to head up its Northern Irish leasing business
but would not be using brokered deals, while NIIB was said to be
continuing to lend via brokers, although it pulled back from deals
in the construction and haulage sectors.
Close is therefore somewhat unusual in making the
decision not only to expand but to move into Northern Ireland,
despite the gap in the motor finance market there.
The company said the move has been “a long time
coming”, but added there were no more firm plans for other growth
in the near future following the opening of a new branch in Swindon
earlier this year.
Culled from the Bank of Scotland (Ireland),
which stopped taking introduced deals at the end of August and
closed down its asset finance unit, the three new account managers
already have experience in the Northern Ireland motor finance
market.
Mareta Davies, senior account manager, will cover
County Armagh, Tyrone and Fermanagh, working with dealers in these
areas from mid-April.
Her counterpart, David McCready, will be looking
after dealerships in County Antrim and Londonderry, while Nichola
Kielty will be responsible for County Down and Greater Belfast.
Competitors Black Horse declined to comment on the
move and Santander and NIIB were both unavailable at time of
writing.
Looking north
Meanwhile, brokerage DSG Financial Services
has expanded from its Manchester office to found a new Scottish
branch at Bellshill, south of Glasgow.
While it will use DSG’s central accounting function
in Stockport, the new division will be self-sufficient in every
other aspect of its mission to pursue a greater presence among
Scotland’s 900 franchised dealer sites.
Currently, DSG’s managing director Richard Hoggart
is spending Monday through Wednesday of each week developing the
Bellshill operation, which will be led by sales director Mark
Gow.
For now, the Scottish operation comprises four
operations and sales support staff, plus one salesperson. They will
soon be joined by a further three sales staff.
DSG formerly had access to the Scottish market
through a partnership with another broker. However, this
relationship came to an end recently, giving the opportunity for
DSG to go independent in the region.
Steep initial growth will be necessary to counter
the training, transport and recruitment costs of starting a new
business unit.
However, expectations are high – Hoggart is
confident that Belshill will write between 2,500 and 3,000
contracts in its first year, compared to an estimated 10,000 in
England.
Aiding growth, he says, will be a general lack of
competition, mirrored in Northern Ireland, as well as the relative
ease with which sales reps can travel between sites compared to
their counterparts in traffic-heavy England.
Targeted areas of business will be the “central
belt” encompassing Glasgow and Edinburgh, Dumfries and Galloway,
and the North East “from Perth up to Aberdeen, and possibly on to
Inverness”, Hoggart said.
“Scotland is very important for us,” said Gow,
“but we recognise that dealers need to know much more about DSG and
how we operate. Every single franchised dealer in Scotland will
have an invite over the next few weeks.”
