on new financial products at Volkswagen Financial Services, two
more captive finance houses – IBM and JCB – have released
announcements about their own product developments.
With sales crises befalling manufacturers across all asset
types, it is clear to see the need for captives to develop products
that suit the financial climate and keep the parent’s business
afloat.
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Last month, IBM Global Financing led the charge with the
announcement on 20 October of its ‘Why Wait?’ technology financing
product.
The offer allows new IBM lessees across Europe to make use of an
interest-free 90-day payment deferral period upon starting a lease,
followed by a 36-month “fair market value” lease.
This allows users to return IT equipment upon conclusion of the
term, or purchase it at a “fair market value” ascertained by what
IBM describe as a “competitive rate” at lease end.
Lessees also have the option of extending the lease, either
using the existing asset or an upgraded version.
The deferral period of the ‘Why Wait?’ product, coupled with the
options for asset ownership at its conclusion, is designed to match
huge market uncertainty: it allows businesses without a clear
picture of their status in four years’ time to procure equipment
immediately on a lease that allows contingencies for different
developments.
Elsewhere, the success of another carefully designed product has
been seen in the midst of a particularly troubled sector – the
construction industry.
Against the backdrop of a predicted 21 percent sales slump for
construction equipment across Western Europe and the floundering of
yellow metal manufacturers, a formerly unremarkable payment-holiday
scheme has helped to keep JCB in the UK market.
JCB Finance reported last month that an astonishing 60.6 percent
of hire-purchase contracts signed in the period between end of H107
and end of H108 were signed under the ‘Take a Break’ scheme, first
implemented in 2006.
By contrast, in the first six months of the scheme only 9.8
percent of JCB’s hire-purchase agreements were signed under ‘Take a
Break’.
The payment programme, modified from the existing VIP Flexibuy
plan, allows customers to take three payment holidays of up to two
months each in a three-year payment plan.
The elapsed time is transferable to the end of the term
agreement.
So far, the ‘Take a Break’ plan has allowed JCB Finance – which
finances 90 percent of JCB diggers in the UK – to continue growing
business during the severe downturn currently afflicting the
construction industry.
Fred Crawley
