BVRLA rejected consultants and glossy brochures and simply stated its case, says John Lewis
Are fleet finance providers like buses?
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.
We 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