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Finance houses frustrate dealers

Comments made in confidence by dealers during research for the Used Car Finance House Survey 2006 published by Sewells Information & Research reveal a high level of frustration.

The survey shows a steady decline in the relationship between franchised and independent dealers and finance houses, though the average overall rating is above the 75% ‘good threshold’. But observations published with the survey point to the areas of most concern for dealers in their relations with finance companies, which are not named.

The first comment in the list by franchised dealers refers to a finance house that has been “outstanding for more than 25 years”. Others speak of good relationships. Their issue concerns rates.

Dealers praise service levels from their finance provider, but say its rates cannot compete with those of direct lenders.

That problem is at the heart of this year’s campaign by the Finance and Leasing Association to encourage dealers to combat direct and high street lender competition through providing additional care for retail buyers.

This dealer’s comment shows frustration: “There is a tendency to be less flexible on your front-end rates when you have a stocking plan with a finance company because they believe you to be ‘captive’. This is one reason why we are looking to change our finance house.”

Problems with field staff are reported. “The representative is not much use when he turns up. I do not think he is living in the real world – he sits there for a couple of hours waffling.”

Another says: “We used to see our representative more often but he visits only every couple of months – it makes a difference to the service we receive.”

But this dealer is thankful to have a helpful representative: “He often sorts things out for us because the finance house’s flexibility and acceptance is appalling.”

Moves to centralize operations irritate franchised dealers. “We used to have a relationship with a helpful local office – we do not find the head office as efficient or friendly.”

Dealers show their determination to find the best rates (“we use one of 10 finance houses, depending on the best deal,” says one). Another comments: “We receive better service and terms from non-manufacturer finance houses and would not return to manufacturer finance unless we were forced to.”

Difficulty in changing finance house is explained. “We are tied into an overall package, which is quite good, and they have a ‘take it or leave it’ attitude.”

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