Des Evans,
UK chief executive of MAN Truck & Bus, described the German
manufacturer’s Financial Services division as “a bank that likes to
sell trucks,” and running that bank is the job of Peter Collins,
managing director of MAN Financial Services (MAN FS).
As the truck and bus company celebrated its
20th anniversary in London, Leasing Life took the opportunity to
speak with Collins and get a closer look at its leasing and finance
arm.
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Collins explains MAN FS, which enjoys a 50%
penetration rate on MAN truck sales in the UK, had a bumper year in
2011 with a £50m jump in new business volumes.
“Traditionally we fund £100m but last year we
funded £150m – it was a complete spike,” he said.
Collins attributed the rise to continued
resistance to lend in the “risky” transport sector from high street
banks.
“It is partly because banks have been less
willing to support the transport sector because they see it as high
risk,” he said.
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By GlobalData“They are very competitive when you have got an
A1 credit rating but [less so] with anything where they don’t
understand the industry, which is where we benefit because we
understand how truck operators work because it is all we have to
deal with and subsequently we fund more vehicles,” he added.
MAN FS’s customers vary from large
multinational rental companies to one-man band truck operators,
said Collins, with different size customers favouring different
finance options.
“Currently in the UK, we have a split, 60%
off-balance-sheet funding to 40% on-balance-sheet funding, and what
we find is the larger operators tend to go for leasing whereas the
one-man-band operators traditionally stick to the hire-purchase
product. That’s not to say that won’t change,” said Collins.
The pattern of finance offered by MAN differs
from country-to-country as well, reveals Collins, depending on a
number of factors from market maturity to regulatory rules.
“We don’t drive the market; products change
market-by-market across Europe,” Collins told Leasing Life. “Some
countries you have to disclose interest rates, some countries you
have to disclose residual value positions. No country is the
same.
“Interestingly, a lot of countries now are
pushing contract hire-style products which we have been used to in
the UK for 20-odd years now. France for example launched
full-service leasing, as they call it, last year and it is a new
product to the market and a huge amount of business is being
written on the back of it.”
Whatever the finance product, in the UK truck
operators continue to look to financial instruments to acquire
vehicles and many look to captive funders as one-stop-shops.
“The big
high-profile names tend to want to lease,” said Collins. “They see
the value of dealing with the in-house finance company because if
there are any issues product-wise on the vehicle they have more
leverage.
“Whereas, if a bank leases it, for example, and
there is an issue with the truck because of the legal route set up,
they would have to go to the bank first and then the bank to the
manufacturer.”
“Being a one-stop shop really does help; for a
customer to have the ability to come in and say: ‘I want that truck
and want to do 160,000 km per annum, I don’t want to worry about
repair and maintenance, tax, tyres etc.’,” he added.
With a 30% share of the truck market in the UK,
and a 50% share for MAN FS, Collins is confident of funding at
least 2,500 trucks in 2012.
He also expects the truck market to increase
further towards the end of the year as operators seek to capitalise
on Euro 5-standard vehicles before the next emissions standard
comes into force in 2014.
The only impediment Collins sees is the
Eurozone crisis, but even on that he is calmly optimistic.
“It all about customer confidence.
“As long as the Eurozone crisis gets settled
and confidence returns to the market you’ll find people will be
willing to invest and use financial instruments to buy trucks,” he
said.
