BVRLA rejected consultants and glossy
brochures and simply stated its case, says John Lewis
Are
fleet finance providers like buses?
Go deeper with GlobalData
I only ask because, after some difficult years
in which leasing and rental companies were looking around for new
sources of vehicle funding, a number of them appear to have turned
up at once.
Actually, the analogy is a poor one. These new
funders didn’t just turn up, nor did the vehicle rental and leasing
sector stand around aimlessly like people at a bus stop.
To paraphrase Norman Tebbit’s famous advice for
the unemployed – the industry got on its bike and went out to find
new funding.
Shortly after the credit crunch, when alarm
bells first started ringing about the dwindling availability of B2B
motor finance and its increasing cost, the BVRLA and its members
swung into action.
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By GlobalDataWe assembled a ‘task force’ and surveyed
members to find out exactly where the funding pressure points were.
We had some preliminary discussions with existing suppliers of
credit and explored some alternative sources to traditional bank
funding.
We also contemplated spending thousands of
pounds with consultants who promised to prepare a shiny industry
prospectus to woo new funders to the industry. However, we soon
realised that the facts spoke for themselves – we didn’t need a
glossy brochure, just
a credible trade association to liaise with interested
parties.
In fact it wasn’t hard to demonstrate that our
sector could provide a healthy margin and low-risk profile compared
to many other forms of finance, particularly government bonds.
Slowly, with us and our members pushing the
same message, the situation began to improve. The whole sector
received a boost in the second half of 2010, when the industry saw
high-profile investments made by Investec and Morgan Stanley.
Ever since then, we have seen a steady trickle
of funders either returning or coming to the market for the first
time, including Macquarie, Clydesdale, Lombard, Barclays, Hitachi,
GMAC and Close Brothers.
Buoyed by strengthening residual values for
cars and vans and a healthy demand for vehicle rental, leasing and
fleet management, the industry is once more an attractive prospect
for asset financiers.
In fact, I would not be at all surprised if,
following its recent restructuring, Lloyd’s Banking Group
rediscovered its appetite for B2B motor finance and decided to
commit its long-term future to the independent vehicle leasing and
rental sector.
It is great to see our industry with a diverse
portfolio of asset owners, whether they are banks, vehicle
manufacturers or independent companies.
Some banks’ balance sheets and internal expertise don’t lend
themselves to directly managing and owning a fleet of vehicles, so
they provide automated funding to the sector. Others banks can see
the good return on capital at low risk that vehicle finance
represents and would rather be directly involved in the industry
where they can add value.
They are all very welcome.
John Lewis is chief executive of
the British Vehicle Rental and Leasing Association
