But with the New Year only a few days’ old, some manufacturers were adding their weight to the interest-free offensive in preparation for the March plate change. Skoda and Suzuki, for example, offer 0% finance on selected models on top of 20% reductions in list prices resulting from an extension of their ‘no VAT’ promotions until the end of March.

Arguably, one of the most competitive deals is a 0% PCP from Toyota that applies to core selling models like the Aygo, Yaris, Auris and Verso.

It’s part of the company’s ‘Access Toyota’ strategy, with Brian Munday, general manager of marketing and customer relations for Toyota Financial Services, explaining: “With 2012 likely to be a difficult year, the key selling points of (finance) accessibility and affordability will be more critical than ever, and that’s the key message Toyota is sending out.”

Volkswagen Financial Services – which represents brands ranging from Skoda to Bentley – also referred to the tough year ahead, with internal communications manager Mike Graham commenting: “The strength of a captive (finance company) lies in the customer loyalty it generates and 2012 will be the year that investment by brands, captives and dealers in the customer portfolio will need to come to fruition.”

Contract hire growth

With manufacturers engaged in a tactical battle to ‘move the metal’ through their own F&I initiatives, how are the independent lenders responding? Vertu’s Stewart noted that independents were recognising the need to broaden their options, with offerings such as PCP and personal contract hire.

Chris Sutton, managing director of Black Horse Motor Finance, acknowledged this need, citing the introduction of personal contract hire to Black Horse’s suite of products.

Nevertheless, Sutton stressed that Black Horse would continue to rely on its traditional strengths.

“Rather than compete purely on price, what we promote is our good reputation, dedicated field-based support teams and superior processing technology that makes for faster decision-making and payments,” he said.

Though showroom finance may be staging a resurgence after what marketing consultant Graham Filmer described as “10 years of terminal decline”, Paul Harrison warns against complacency, predicting that 2012 will see supermarkets join other direct lenders with “a renewed appetite” to win back market share lost to dealers.

That’s why the FLA is keen to maintain the momentum of its Specialist Automotive Finance scheme, described by Harrison as “a benchmark for good standards to instil consumer confidence”.

He reports that 80% of the top dealer groups, accounting for around 1,500 dealerships, have signed up to SAF since its launch in 2007, with 50,000 online competence tests undertaken by dealer personnel.

A critical role of SAF is to ensure that dealers are complying with latest consumer legislation, with Peter Stewart at Vertu – the first plc to obtain accreditation – reporting: “It’s stood us in good stead.

"All staff are comfortable with the regulations and as a result can talk to the customers with confidence.”

Perrys’ Johnson added: “Compliance is more important than ever. We monitor every sales exec with multiple KPIs (key performance indicators), of which finance is a key element.”

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