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Yes Car Credit in trouble

Speculation is mounting in the motor finance sector that troubled Yes Car Credit (YCC) could be planning further management changes and branch closures within its 27-retailer network.

After shutting its Hull and Warrington outlets earlier this year, the sub-prime finance specialist, a subsidiary of Provident Financial, promised to “strengthen the quality and depth of management and to reduce costs” at the parent company’s May 24 AGM.

Current managing director Steve Plowman is leaving at the end of this year and headhunters are searching for a replacement.

The statement by John van Kuffeler, Provident Financial’s chairman, admitted that YCC “is trading at a loss. It continues to face tough market conditions with lower sales volumes than in the buoyant early months of 2004” with a worse-than-planned collections’ performance.

YCC, which matches finance packages to used cars in its stock, refused to confirm or deny suggestions among F&I observers that it has been “inundated” by repossessions, allegedly running at a rate of 1,400 over two months.

Provident management has become more hands on in its approach to overseeing the YCC operation.

One sector analyst says: “The basic business model is sound but it appears that, by majoring on commission for selling and financing the cars and stocking poor quality cars, there are large scale vehicle returns. People with poor repayment profiles who have problems with the cars are turning them in and that means inevitable loan write-offs.”

He added: “One problem is that Welcome Finance, owned by Cattle plc, is doing the job better and has set up shop next door in Edinburgh.”

A trading statement is due on July 12. Last year YCC stayed ahead of the market with sales volumes down 1.5% against the 6% used car credit sector decrease. In the second half of 2004, unit sales fell 16% – around double the market performance fall.

Bad debts costs rose by 28% in 2004 to £42.9m, while profits before tax fell by £6.8m to £4.4m.

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