F&I Management & Training

Stoneacre, the 29-site new and used car dealer group, has launched Stoneacre Financial Services in partnership with Marsh Finance.

Stoneacre Financial Services will offer subprime car finance to both online customers and those who have been turned down at one of their 29 nationwide locations. The venture will also allow Stoneacre to offer subprime van finance.

The group, which has brokered subprime finance since 2007, will be lending its own money, a decision which Mark Zavagno, head of digital sales at Stoneacre, has attributed to 18 months' growth in finance applications through its forecourts and the groups' increased web presence.

Stoneacre will continue to act as an intermediary for both prime and subprime finance from other lenders.

Although it has not been unknown for dealers and lenders to operate business models in which risk and reward is shared by both parties, it is by no means widespread. One managing director at an independent finance provider commented in reaction to the move taken by Stoneacre and Marsh that they were "discussing seriously" similar structures with dealer partners, but that it was worth bearing in mind the needs of any dealer transitioning from income on a commission to a profit share basis.

The two companies

Marsh, the Rochdale-based finance and portfolio management house, has worked with Stoneacre since before the credit crisis, with the group being one of the first to use the company's scorecards to speed up the grading of its lending quality.

Steve Reynolds, group F&I manager at Stoneacre, said the two companies had developed a scorecard "which will enable us to underwrite deeper than ever, it's fantastic news for customers who've previously been unable to obtain car finance from a franchised retailer."

Andrew Marsh, managing director of Marsh Finance, told Motor Finance he was "delighted" with the white-label arrangement which presented Stoneacre with "niche opportunities" to add sales and additional income with "none of the start-up cost".

Stoneacre and Marsh were each commended by industry peers at Frontline Solutions' 3rd Annual F&I Conference and Awards Dinner in October 2012 for their work in finance. Reynolds collected the F&I Innovation Award on behalf of Stoneacre while Zavagno picked up the Near to Sub Prime Introducer of the Year Award and Marsh Facilities Management was named Product / Service Provider of the Year.

DATED: 12.04.13

FEED: MF

The value of new-car dealer finance rose by 42% by value year-on-year in February to £478m across 33,995 unit sales, a 31% rise by volume, according to latest figures from the Finance & Leasing Association (FLA).

The figures were down on those for January, although this may be attributed to February characteristically seeing the lowest volume of car sales each year before the new-registration plate spike in March.

The rolling 12-month figure for penetration of finance sold through dealers on new cars hit 71.9% in February, the 23rd consecutive month of growth.

'Competitive marketplace'

In both used and new car finance for all periods reported, the rise in value outstripped that of volume.

In the three months to February, new-car finance was up 27% by volume year-on-year to 118,226 units and up 33% by value to £1.72bn. In the 12 months to February, the figures were up 28% by volume to 679,429 units and 36% by value to £9.70bn.

In the used market, February saw the volume of cars sold on finance rise 7% year-on-year to 71,544 units and 11% by value to £666m. In the three months to February, volume was up by 7% to 189,875 units and value by 12% to £1.79bn; in the 12 months to February, volume rose 7% to 796,583 units and value 8% to £7.40bn.

Given the performance of finance in the new sector, above the growth in new car registrations, Paul Harrison, head of motor finance at the FLA, called on the Government to ensure "its new regulatory regime for consumer credit maintains a competitive marketplace and supports the continued availability of affordable credit for customers."

DATED: 12.04.13

FEED: MF

New car registrations rose by 5.89% in March and 7.39% in the first quarter of 2013 year-on-year, according to the Society of Motor Manufacturers and Traders (SMMT).

Industry predictions of the number 13 plate not steering away custom proved correct as 394,806 units were registered in March, compared to 372,835 in the same month of 2012.

The figure was approximately six times that of February, typically the quietest month of the year for new car sales, and makes up the majority of the 605,198 new cars sold in Q1.

As such, the SMMT has said full-year registrations could exceed its January 2013 prediction of 2.057 million unitsbut warned this figure is under pressure from the "subdued" economy and trading conditions.

Private sales rise

As reported in recent months, private car sales were cited as a growth factor across the quarter by the SMMT, up by 11.24%, 2013 year-to-date compared to Q1 2012.

Sales of petrol-engine cars were up 8.71% in March and 12.11% in Q1 and remained above diesel registrations by volume, which grew by around 3% in both periods.

Registrations were up across all segments except Upper Medium and Luxury Saloon in March, including a rise of 56.5% in the Mini segment, plus double-digit growth in MPV and Dual Purpose segments.

The Ford Fiesta was the biggest-selling model in both March, with 22,748 registrations, and Q1, with 34,309 registrations.

DATED: 12.04.13

FEED: MF

British Car Auctions' (BCA) Pulse report for March demonstrated a 0.7% decline in average values from February, although year-on-year values rose by 17.1%.

The average value was £7,000, down £56 from February but up from £5,974 in March 2012, with an average value against CAP of 97.8%. This marks the fourth month in a row average prices have hit £7,000 or higher, and the fourth-highest month since Pulse began in 2005.

BCA said such high values resulted from a shortage of retail quality stock, and UK operations director Simon Henstock said prices were high "largely as a result of the constricted supply rather than strong demand".

Cars were also coming to market earlier, with an average age of 61.7 months and an average mileage of 56,510, compared to 63.4 months and 58,923 a year ago.

Fleet, part-ex and nearly new

Fleet and lease values fell £117 (1.3%) to £8,734 between February and March, marking a year-on-year rise of 12% and a value against CAP of 97.68%. Cars were also coming to market earlier in 2013, with an average age of 40.4 months compared to 41.4 a year before, while remaining virtually static month-on-month.

Part-exchange values rose marginally month-on-month, from £3,556 to £3,566, which represented a year-on-year increase of 22.8%, with value against CAP at 95.9%. The average age of part-exchange vehicles also fell year-on-year, from 89.5 months to 87.6 months.

The average value of nearly-new cars, with an average age of 8.7 months, grew 13.3% month-on-month to £21,075, beating CAP valuations at an average100.7%. BCA said nearly-new values are always affected by "changing model mix" and March's figures "reflect a number of special high value sales staged by BCA" over the month.

Henstock said: "With volumes increasing quite significantly in March, we saw pressure on conversion rates and a notable reluctance for trade buyers to bid as strongly on poorly presented vehicles."

He added: "As we are now in the post-Easter period, the dynamics of the wholesale markets are changing. Typically this time of year brings a softening in demand combined with an upswing in supply, so we expect to see continuing pressure on values and conversion rates in the weeks ahead."

DATED: 12.04.13

FEED: MF

Manheim's monthly Market Analysis has reported that average part-exchange values have hit an all-time high, breaking the £3,000 mark to reach £3,023 in March.

As well as the month-on-month rise, values increased by 18.7% year-on-year, reflecting similar trends reported in March's BCA Pulse report. The figure marks three consecutive months of increasing prices, continuing an upward trend started in July 2012, which has seen average values rise £649 in the past nine months.

The increase mirrors better value retention of used cars compared to their original retail value, with vehicles sold in March reaching 19% of their original price for the first time.

Manheim said the figures resulted from dropping vehicle age and mileage in March, with average mileage down by 2,545 miles (3.4%) from February.

The company reported that seven of the 10 segments covered by the report saw increased average prices in March, highlighting executive models, which rose by £503 (10%) and coupe models, which rose £192 (3.5%).

Daren Wiseman, valuation services manager at Manheim, said: "Strong demand for used cars has continued throughout the first quarter of the year, which has helped keep average part-exchange values high", explaining demand had seen "a growth in online bidding. March auction figures reported an increase of 20 per cent in online users' month-on-month."

However, he added: "We are now starting to see the effect of a cold and early Easter, which has led to many dealerships being well stocked and an increase in the volume of vehicles coming through the auction houses. This has led to a switch from a seller's market to a buyer's market."

DATED: 12.04.13

FEED: MF

ACF Car Finance and parent lender The Funding Corporation have warned stricter MOT regulations could see more consumers having to ditch old cars, thus pushing up demand for subprime lending.

Non-prime finance provider The Funding Corporation said at present many of the cars it takes in part exchange would not pass the tightened rules of the MOT begun in March to bring the UK in line with EU standards for cars.

Mark Jones, senior manager of operations at ACF, the used vehicle retail group of The Funding Corporation, said those with less disposable income and keeping hold of aging cars would be most affected: "We know that many of our customers put off replacing their car because of the difficulties they experience in getting a loan due to past repayment problems."

'Blemished history'

Rather than "scraping" through an MOT, Jones said people in such a position would now be faced with repairs they could not afford.

ACF began a drive in 2011 to increase referrals of consumers who had been refused finance, repeated alongside a loan approval rate of 35% this time last year, and Jones explained the company would be "flexible" in accepting those with a "blemished credit history" who were struggling with their MOT.

The company would not automatically decline people "who can demonstrate that they are able to afford realistic loan repayments", said Jones.

David Challinor, managing director of The Funding Corporation, speaking at the Finance & Leasing Association Motor Finance Convention in November 2012, added protection of the consumer through transparency of information regarding subprime lending was paramount at the company, saying its repeat custom was "virtually non-existent, for all the right reasons".

The approach echoes comments expressed at a Motor Finance round table in May 2012 where representatives of non-prime lenders including Peter Minter of Moneybarn and Oliver Mackaness and Gary Hill of Billing Finance spoke of the need to determine 'affordability' when underwriting subprime loans.

DATED: 12.04.13

FEED: MF