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Funding squeeze ‘to late 2013’

Dealers struggling to arrange funding for day-to-day operations, or to expand, should consider switching from high street banks to a manufacturer’s captive equivalent.

“Many dealers do not like the idea of being too dependent on a manufacturer, but there is a counter argument,” said a senior executive in the automotive business retail sector.

“A manufacturer financing a dealer group has a powerful motivation to help it to succeed.”

The executive was one of a number in the sector assisting dealers who spoke to AM privately about the dilemma of banks that impose higher interest rates and restrictive overdraft rules.

One boss of a franchised group moved banks because of its overdraft spikes in plate-change March and September.

An executive who advises dealers said: “Many groups under pressure from their banks find it difficult to switch because others are operating in the same way.
”But a well-run dealer group with the right franchises and a viable business proposition should always be able to obtain funding.”

He said some banks did not want new dealer customers and refused to take on those trying to transfer because their business was in trouble.

Financial advisers expect little improvement in the provision of dealer funding until the second half of 2013.

“Dealer funding has been a problem since 2008, but this applies to other retail sectors”, he said.

One executive warned that the performance of franchised dealer groups, either up or down, was then likely to become more pronounced from 2014.
 



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