Close Consumer Finance, the motor finance division of Close Brothers merchant bank, is planning to double turnover in the next two years. The company is targeting smaller, independent franchised dealers with one or two sites who are looking for a traditional, personal service from their finance provider.
James Broadhead, development director, said the company only dealt with "five or six" of the AM100 dealer groups but that was "more through choice". It recently turned down an approach from a large multi-franchise operator because "we felt it was out of our league".
Close, which has its roots in Yorkshire, has grown rapidly since the arrival of former Wagon Finance director Mike Barley as managing director two years ago. Wagon Finance has now been absorbed into First National Motor Finance, the UK's second largest motor finance provider, and other former Wagon staff have followed him.
Close saw new business up 33% in the financial year to end of July and is running 50% up in the first quarter of this financial year. It will write around £180m in loans this year and now has 15 branches, including a recently opened operation in Edinburgh.
"We modelled the business on Wagon with no centralised processing and everything done in the branch," said Mr Broadhead. "The smaller end of the market tends to get neglected. The big companies haven't got the personal touch."
A typical Close branch will consist of one manager and four account managers with approvals written locally and no credit scoring. Two more branches will be opened this year and more account managers employed to work from existing bases.
The company has invested £300,000 in the development of an internet-enabled front-end proposal system but, for the moment, all business is done by fax. Account managers carry chequebooks and pay commission personally.
"Motor traders like the feel of a cheque - that's the way they are," said Mr Broadhead. "Everybody in the industry has now gone over to BACS (automated bank transfer) and we've gained some serious business."
Growth is coming by taking business from rival medium-sized finance houses and, increasingly, from dealers who are unhappy with central processing and automated underwriting. Typical new customers are turning over between £1m and £2m in finance business a year.
At the moment 99% of business is conditional sale on used cars but Close can offer a residual value product and personal loans. A brief experiment with sub-prime two years ago was stopped because "we haven't got the expertise and it needs a totally different approach", said Mr Broadhead.