When General Motors sold a controlling stake in GMAC to private
equity firm Cerberus in 2006, some analysts warned that the
decision could hurt GM in the long run, as GMAC’s primary focus
would shift to making a return for shareholders rather than
supporting the sale of GM vehicles. Now, it appears those fears are
beginning to be realised.
In response, GM has launched a marketing programme “Financing
that Fits”, to reassure customers that credit for cars is still
available, although maybe “not with the lender you’re used to”, a
company spokesman said. And in an indication that the former
captive’s relations with GM may be becoming strained, US dealers
are reportedly being incentivised to place finance customers with
Ford, meanwhile, has written to its US dealers to reassure them
that they can still place customers with Ford Motor Credit, which
has not tightened underwriting standards.
Back on this side of the pond, it feels like motor finance is
currently in the eye of the storm, with an eerie calm prevailing as
everyone waits to see which way the cat will jump. Will Fortis
Lease close its Motor Retail Finance division now that BNP Paribas
has bought its European parent? When will any integration of
Lex/Lloyds TSB Autolease or Black Horse/Bank of Scotland Dealer
Finance begin to take place – if the merger goes ahead as planned?
Will the UK government end up, bizarrely, with a major say in
running the largest corporate fleet operator in the UK? The next
few weeks should begin to bring answers to some of these questions;
for now, read p16 for Brian Rogerson’s take on what the Lloyds-HBOS
news will mean for fleets and point-of-sale finance.
While the problem is not so acute as in the US, it is
nonetheless the case that car buyers are finding it more difficult
to secure finance for their purchase. Nowhere is this more true
than in the sub-prime sector – with the sector’s lifeblood,
brokers, left reeling after BCT’s decision to stop paying
commission to intermediaries. Still, some smaller players are
coping well, if not exactly prepared to take up the slack (see “You
can get finance – as long as you can prove you don’t need it”).
Finally, a strong and credible rumour has reached our ears: a
major UK dealer group has sacked all its sales development
managers. While this may help to cut costs in the short term, in
the long run it may prove to be a desperate move: who now will
visit sites to make sure that dealers are selling F&I in a
compliant manner? With dealers folding left, right and centre after
a disastrous September for car sales, now is not the time to ignore
the extra income that comes from selling finance.
Let’s hope that by this time next month the dust will have settled
a bit – although the scene is unlikely to be pretty.