At the end of 2016, RCI Financial Services named Jean-Louis Labauge as its managing director, replacing Steve Gowler who retired after 25 years of service. Motor Finance caught up with Labauge to find out how he is finding the new role, and gain an insight into his plans for the company
Motor Finance: Could you tell me a little about your background?
Jean-Louis Labauge: I started about 24 years ago with the Renault Nissan Alliance. So it’s been a long journey with the company, but I have to say it’s been an exciting one.
I’ve been blessed with having many opportunities to change countries and positions over the past almost a quarter of a century. I started initially at Renault but spent the past 20 years in the auto finance world for Renault and Nissan, working in a number of countries, namely Switzerland, Poland, Malta, India and the UK.
I have to say every time is different, but every time is also pretty much the same. What I mean by that is that everywhere you go, the customer need is the same, basically. That’s the dream, to have the car that you want to have. And that’s a big project for anyone because it’s a very important expense. But at the same time it’s different in the way you do it, and the way you help the customer fill his or her dreams of buying the car.
MF: How did you find your time in India? What’s that market like?
J-LB: It was my last experience before joining the UK. I started the finance company for Renault Nissan. While it was a completely new company for us, the market and services are not new and auto finance is not new. It is not that old either– it’s been there for 15 years – so there is a dynamic auto finance market, and in turn there has been a dynamic automotive market. It’s fiercely competitive in India, but it was interesting.
Again, it’s about fulfilling the same needs, but doing things differently. You usually say “think globally act locally”, but it really applies to that kind of a market. At the end of the day you need to support the strategy of Renault Nissan and Datsun, but then you need to adapt, and adjust the reality of the market – the ways to assess the affordability of the customer or whether we can lend to a customer.
You know some concerns around the geography and the fact it’s quite a big country, but you need to take all this into consideration.
At the end of the day it’s all about being as fast as possible, and bringing the best service as possible. As usual, when you are in an emerging market you don’t go through all the stages that more mature markets go through. You can deploy a tablet or mobile application to write loans much faster than in other markets because you don’t have legacy issues and all the other hurdles that you have with a long history behind you.
It was also really very interesting. From a human perspective and from a relationship perspective it was an extraordinary experience, with the people and the team and the excitement of the people to learn and to deploy and develop new things.
MF: What was it like coming from an emerging market to a more mature one like the UK, with its highly regulated nature?
J-LB: It’s interesting because everywhere I’ve been, the first thing they say is ‘it’s a very regulated market, it’s very different’. But something that’s really striking is that, actually, regulation is pretty much uniform across the world, at least in the markets where I’ve been.
What I mean by that is when you transfer from one market to another, at the end you realize it’s all about the same interests that you need to protect in the market. I wouldn’t say the UK is much more regulated than any other market; I think it’s regulated with the right purpose, to protect all the interests that need to be protected for the customer and for the market.
We are used to working in a compliant and regulated environment.
We are happy to do so; we simply comply and make sure we deliver the best service applying the rules in the markets. So that is not something where I really think it’s very different.
In terms of mature markets it’s not boring either; it’s also very exciting. We have a lot of things, an extraordinarily rich experience in the market.
I think the PCP market in the UK is definitely, for me, well ahead of other European markets. The short life cycle in the UK is also very interesting, because the assets rotate very frequently. There are a lot of very exciting things and situations in the UK market that I will look at and discover.
MF: What else are you finding exciting?
J-LB: Firstly, it’s such a dynamic and growing market; at least in 2016 we were in a growing market, and so far the first quarter of 2017 also grew. It’s also really big. If you add the Renault Nissan brands together, we are quite large in terms of market share. It’s quite exciting to be able to process so many loans, and still try to develop the best service possible with quick, automated decisions, and have very simple processes for the dealers and the customers to get a loan with us.
MF: How is your savings bank performing?
J-LB: We launched in June 2015, so it’s not even two years old. We’ve had a very successful journey with that, we’re extremely happy with it. We have 60,000 customers in our book, and more than £2bn as deposits. We have had a really very fast and immediate response from the public and the customers in the UK.
Basically, our product is really about ease and transparency, with no gimmicks or tricks. We are very proud to really offer the most simple and most transparent, easy-access saving account.
Looking to the future, we want to continue to grow our book in terms of deposits, but always proportionately to the size of the business we have on the automotive side. What we do with the deposit is linked to the auto loan business. The deposit business is only meant to help us diversify the funding on our auto loans business. We simply use this fund avenue to help us diversify the funding, and also help the automotive industry in general to continue to grow by providing car loans to customers in the UK. There is no ambition to become extremely big in this area, it has to be related to the auto loan business that we have.
MF: I suppose you don’t want to add too much to complicate proceedings, if you want a simple offer.
J-LB: Exactly. We are extremely happy in terms of the customers that we have and the customer feedback we receive on this book. The customers we have are not necessarily, actually I would say generally, customers of Renault Nissan, but they come to us because they are happy with the product we offer and that’s exactly what Renault Nissan wants, a product which is fulfilling the needs of the customers.
We are looking for simple, easy, transparent access – nothing to do with the automotive needs of the same customers. They are just coming to us because we have the right answer to their needs in terms of deposits. We are committed to delivering the best service possible to these customers, so it’s easy to contact us by mail or by phone. And the customer is absolutely delighted with the service we provide them.
MF: Do you have any big plans or initiatives for the next 12 months or so?
J-LB: We continue to aim for growth. 2016 was a record year for us in terms of volume of contracts. It was a very fine result and we look forward to continuing growth in 2017. The first quarter looked very dynamic. Maybe the second quarter will be slightly slower, but we expect again to have a great year.
Our primary goal this year is to continue to deliver the best service possible to the brands, the dealers, and the customers. We are always reviewing opportunities to bring more services, and solutions to the customers, and we are definitely looking to enhance everything in terms of digital and the way we are accessible, in terms of customer portals and applications and so on.
It might not be a complete breakthrough, but we are continuing to develop and enhance the service to the end customers, as well as protect the growth of the manufacturers – that’s the plan for 2017 at least.
MF: PCH growth is a trend I’m seeing. Is that something RCI offers? Why are we starting to see it grow?
J-LB: We do have PCH; it really addresses the needs of some customers. Maybe we are not strong enough in that product if it is really a trend, but it’s continuously growing.
It is definitely something we’re looking at and seeing if there is a shift in the needs or expectations from customers, and we are ready to be part of this, or of any change in the industry. So far we are not very big in that area to be honest with you, but we are observing, and are definitely ready to respond to more tenable growth in the sector, and to more requests from customers.
MF: Do you see any potential black clouds on the horizon?
J-LB: When we look at how we closed the year 2016 and what is coming ahead, there are a lot of opportunities but also some potential headwinds.
I would say it’s a normal assessment with the next two years now that we have initiated Brexit. This opens two years of negotiation, which means in two years we may have a different paradigm. We will learn what that will really change as we go through the process and negotiation.
For the time being it’s a bit too early to have any real negativity being factored in what we see for the future. It’s a bit too early to draw any conclusions on what could happen after the triggering of Article 50 – too early to have any visible signs on whether any clear impact could be positive or negative.
Can we continue to grow forward or will it stabilize around the level which we reached in 2016? This is normally the assumption of the SMMT for 2017; it was the initial assumption, but the first quarter indicates the contrary. So the full year should not be that much different from 2016. I don’t know.
MF: You’ve been in your new role for a few months now. What have been some of your initial takeaways?
J-LB: We never stop learning. That’s the first takeaway for me. I’m passionate about learning and discovering new things, and that should be the most important takeaway. I’m really eager to learn from the team, from the great successes they have really been able to achieve.
Secondly, the market is really interesting; it’s unique and different from the others in terms of offers, the shorter life cycle, and PCP being so prominent, so I’m really learning from that.
Going back to my initial formula, the need is the same everywhere; it’s the way in which it is addressed which is different.
The need is absolutely the same: At the end of the day we are talking about families, or people, who want to have a car, or a professional who needs a car for business, and how we best serve this customer’s needs. The way you do that is really largely driven by the market itself; that’s what is really interesting for me.
MF: You said the UK is ahead with PCP. Do you think other European markets are going to develop in that direction?
J-LB: All the European markets are developing. In France, people talk about leasing a car, not buying a car with a loan. There is a shift from traditional buying or purchasing a car or a car loan – the equivalent of HP here in the UK – to pure use of the car. So there is definitely a shift there and it is happening in France quite significantly.
I think that all the markets, like Germany, are also in the same dynamic. So it is surely moving in other markets, it’s just that the UK has been there for quite a long time already, and is now showing the benefit for this short life cycle. The market, I think, is evolving towards that same direction, towards that end of the market.