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Finance analysis: Comment with Chris Sutton

Not since the seventies have we seen so much uncertainty in our markets. Customers are putting off changing their vehicles and market projections for new car sales have dropped to below 400,000. 

Many lenders have seen access to the funds change and are becoming more cautious on how they deploy more limited resources with the economy heading south.

But there is plenty of opportunity. People are still buying cars and often need finance. Finance companies have to sharpen their approach, change their attitude and in some cases, their structure, to reflect these pressing market conditions.

Black Horse has recognised this and has reorganised its senior management team to help dealers face the challenges.
Our repositioning will provide greater strategic focus and assist dealers to address many of the pressing point-of-sale finance issues during this market turmoil.

Real terms

In real terms, this will deliver greater emphasis on pricing, product development, support and effective sales distribution to drive sales and maximise profit. 

Finance companies and dealers should be promoting the many customer benefits of POS finance more aggressively. 

Apart from offering an extra credit line for dealers’ customers, there are many products, including payment protection, which can provide specific benefits and profit opportunities for dealers. 

There is some anxiety that profitability will be reduced and lenders will have to become leaner and fitter to survive.

Banks will expect their motor finance subsidiaries to make decent returns for investors, so terms will come under the microscope. 

Dealers will reduce costs and look to where they can improve returns.

They should be upfront and ask their finance provider what specific measures they are taking to help their business exploit the new opportunities and to prepare them for a recognisably different market in the medium term.

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