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Yes Car Credit closed

Yes Car Credit, the sub-prime motor finance operation owned by Provident Financial, has closed today following huge losses. About 820 staff at its headquarters and 27 showrooms will be made redundant.

It blames competition from dealers and insurance regulations for making the business “no longer viable”. Provident Financial announced this morning that efforts to sell the business had failed.

AM first reported in June that the motor retailer was having financial problems and was facing changes in its management. In September, Provident Finance confirmed the business had been trading at a loss since 2004, and forecast 2005 full year losses of between £15m and £20m.

The finance house today increased this forecast to a £24m loss.

The total bill is expected to add up to £141m, based on written-off consideration of £91m, asset write-downs of £20m and exceptional closure costs of £30m. Chris Johnstone, managing director of its UK consumer credit division, will leave the group once the closure is completed.

“Over the past three months, in conjunction with our financial advisors, we have worked hard to find a buyer for the motor retailing activities of Yes Car Credit. Unfortunately, last Friday, December 9, negotiations with prospective purchasers ended unsuccessfully,” says Provident Financial’s statement.

“Increased competition from motor dealers for sub-prime finance customers, together with regulatory changes that have reduced sales of insurance products, have resulted in operating conditions that are very different from those that prevailed when we acquired the business.”

Provident Financial says Yes Car Credit’s outstanding customer receivables book, valued at £240m, will be collected out as they fall due.

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