Each month, Motor Finance analyses results
posted by lessors and motor financiers over the previous four weeks
to discover the latest trends. Jason
T Hesse looks at those published in August
Reporting a profitable 2008,
ING Car Lease UK Limited said it saw the total
number of vehicles under the company’s control reach 51,672 – up
year-on-year by 1,800 units.
Of these, the vast majority – 40,671
units – were supplied under operating lease agreements, while the
rest – 8,968 – were under finance lease agreements.
In the year ending 31 December 2008,
ING Car Lease recorded a gross profit of £22.3 million,
significantly higher than the previous year’s £13.5 million. The
car lessor saw margins fall by over five percentage points,
however, from 18.8 percent in 2007 to 13 percent in 2008.
The lessor noted that 2008 was the
first full year of operation for ING Car Lease since it acquired
Appleyard at the end of 2007.
“Synergies brought about through the
combination of the two businesses have been realised in 2008,
although many of the operational benefits were only recognised in
the second half of the year, resulting from the post-integration
reorganisation,” the directors explained.
Although the company achieved a
pre-tax profit of £8.3 million, nearly double the previous year’s
£4 million, ING’s directors added that results in the second half
of the year were affected by a slowdown in the used vehicle
Indeed, residual value exposure at the
end of 2008 was £188.8 million, up by 15 percent year-on-year, with
the portfolio regularly reviewed by the company.
At captive lessor FGA Capital
UK Limited, residual values were also the main risk in the
year ending 31 December 2008, which it said it was monitoring
The lessor, formerly known as Fiat
Auto Financial Services Limited, and part of Fiat Group, still
maintained good results, however, seeing pre-tax profit grow by 77
percent year-on-year to £385,000; on a turnover of £37.1
“Our improved financial performance
was achieved by focusing on improved profitability on our major
dealer accounts, exploiting opportunities in the fleet financing
segment, and control over costs,” the directors said, adding that
they hoped for a similar strong retail financing package across the
Fiat and Alfa Romeo ranges in 2009.
Earlier this year, in April,
FGA Capital started providing retail financing
services to Jaguar and Land Rover, which FGA Capital’s directors
say offer “great opportunities” for growth.
At captive financier RCI
Financial Services Limited, which reported its results for
the year ending 31 December 2007, results were strong, with revenue
more than doubling to reach £123.4 million at year-end.
Pre-tax profit fell year-on-year,
though, from £8.1 million in 2006 to £2.9 million in 2007. This was
attributed to an increase in the cost of risk because of
“disturbances” in the recovery chain during the reorganisation
phase, following the merger with RFS Ltd, Renault’s captive, in
Post-2007, the lessor, which provides
retail vehicle financing to customers and wholesale financing to
the Nissan and Renault network, saw overall penetration reach 27.2
percent in 2008. This fell to 19.8 percent at the end of April
2009, while the number of new agreements written by April 2009 was
17,701, which was down 44 percent on the same four-month period in
2008 – which the company’s directors attributed to the economic
Nissan market share stands at 3.17
percent, which the directors said was up slightly; while Renault
market share was 3.44 percent, which is down year-on-year.
RCI’s directors said they remain
positive for the future, however.
“We have access to adequate funding
and maintain long-term relationships with dealerships across the
country,” they said. “We continue to be profitable in 2009, despite
the recent economic downturn, and we expect to remain so for the
next 12 months.”
Meanwhile, at fleet provider
Grosvenor Contracts Leasing Limited, pre-tax
profit fell by 22 percent to reach £1.1 million in the year ending
December 31 2008.
Group turnover – which includes the
York Ward & Rowlatt, Croyland Motors, and Eyebury Trucks
businesses – was up, however, and reached £120.4 million at
Yet despite the economic downturn, the
company said it saw a small growth in both fleet size and customer
base, and that even though there was a “fall off” in residual
values in the second half of the year, it maintained closure
profits at a “respectable” level.
“This was mainly due to sensible
underwriting at the outset of the contracts, and first-rate
disposal performance where we out-performed average values and
conversion rates,” the directors said.
In terms of the risks facing the
company, Grosvenor’s directors said that industry consolidation was
one of the major risks.
“Acquisitions and mergers create
competitors that, due to their size, have considerable buying
power, but often fail to deliver the high level of service that a
company such as Grosvenor is able to provide,” they said, adding
that they have identified fleets with fewer than 200 units as a
target market on which to concentrate in future.