Consumers are still very wary, and on the lookout
for a bargain. Brokers have always been in a good position to
secure special deals for their clients, as volume buying allows a
certain amount of negotiation, but whereas pre-crunch around half
of business came from special offers (with the other half from
standard deals), now one broker reports over 70 percent of deals
written come through this channel.
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But in the current market, even ‘special’ sometimes
isn’t special enough. As an example, one of our brokers has managed
to secure a fantastic deal for a lease on a small, city car; top of
the range, with air conditioning, alloys, front and rear fog lights
– the works. But they aren’t selling – despite the lease payments
being less than half what they should be, and also despite ticking
the ‘economical’ and ‘low CO2’ boxes as well.
Clearing the backlog
Price is everything at the moment. Consumers are
looking to take longer leases for cheaper monthly payments, and
four-year contracts are becoming common. The problem for brokers is
compounded by the lack of cars available as manufacturers no longer
have fields of cars waiting for distribution. Previously,
manufacturers would offer high discounts to clear any backlogs, but
in a slower market, stocks are being depleted, clearing any
backlog, and, of course, removing the need to offer any
discount.
For fleet brokers the picture isn’t quite as bleak
as their longer lead-in times mean that they struggle less with low
stock volumes, although the recent news that Lombard Vehicle
Management (LVM) is closing its doors to broker business and
dealing only in direct funding may impact on fleet intermediaries
more than on the SME fleet/personal contract hire broker.
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By GlobalDataLVM is now concentrating on its own customers and
direct business. Its advantage in the broker market was its
extremely competitive pricing; it often offered the cheapest
finance in the market, and is likely to continue to do so – but
only through its own sales team. The likelihood is that because of
relative limited resources within that team (compared with an
entire broker network), economies of scale suggest LVM is unlikely
to be targeting the smaller, individual or SME deal and instead
will probably concentrate their sales resources on fleet finance
for bigger business.
But as the NACFB director of vehicle finance, Andy
Bell, puts it: “The key areas where broker businesses will succeed
will be customer service, efficiency and strong funder partnerships
with mutual interest. The vehicle leasing broker model is mature,
robust and continually evolving, funders will come and go and
brokers will do what they have always done adapt and move forward.
The future is bright.”
Adam Tyler, chief
executive of the NACFB
