The bank that likes to say yes

With the current selection of lenders available to the motor trade seemingly unable or unwilling to try and do their part to stimulate new and used car sales, the RMIF have proposed the setting up of their own finance arm which would be an exclusive service offered to their 8,000 business representation and would aim to assist dealers in selling more cars.
Rob Foulston, chief executive of the RMIF commented: “The current economic situation has made it clear that the retail motor sector would benefit from having its own source for consumer finance. While credit is available, this additional resource can only be of benefit to the industry.

“By having its own finance house, the retail motor sector will have control over its own finance, and be able to market this directly to consumers and businesses.”

With an estimated 300,000 customers denied credit facilities in 2008 and more pessimistic predictions for 2009, this could be a shot in the arm for many struggling car sales businesses. For many months now all parts of the industry have been lobbying the government to help with added finance and funding solutions. A facility set up by motor dealers for motor dealers would undoubtedly help with confidence in the trade and may even provide much needed competition to existing lenders who are, if the numbers are anything to go by, reluctant in the extreme to lend to anyone other than a blue-chip customer.

Customers can only benefit from the extra choice offered to them and dealers will have the comfort of knowing that someone is on their ‘side’. Dealers have all too often lately watched sales staff bend over backwards, taking great care and time to offer a great customer experience, only to fall at the funding (or lack of funding) final hurdle!

MTI wishes the RMIF every success with this venture, which with the right backing could make a significant difference, and surely most car dealers would echo this.

From the SMMT:
The Finance and Leasing Association (FLA) has published statistics showing that people buying cars on finance dropped significantly in the last quarter of 2008. The number of cars bought on finance by consumers through dealerships was down 19% in the last three months of 2008, compared to 2007 levels. Dealer finance levels also dropped with 27% fewer new cars and 13% fewer used cars purchased with dealer finance. 2008 figures as a whole suggest that the number of new and used cars bought on finance by consumers contracted by 3% and 2% respectively. In total, 53.2% of private new car sales, 475,000 vehicles, were bought using dealer finance in 2008. Stephen Sklaroff, director general of the FLA, said: “If motor finance companies are to continue to be a key source of credit for consumers, they need to be able to access government support which is already in place for some parts of the financial sector.”

Watch this space for further developments.