WE had a chance to sit down with Elliott Woodhead, director of SME & partnerships at Arval, and ask him about the future direction of the Arval broker programme.

With the Arval broker conference coming into view later this month, here’s a chance to get some insight into Elliott’s thinking for the sector.

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• First up Elliott, can you provide a % split of Arval’s fleet – corporate/SME direct/Broker/Public sector?

Our fleet is split pretty evenly between SME and Corporate business.  Broker is around 60% of our SME fleet.

•  And how many brokers do you have?

Around 70. We segment our brokers into the following categories: 5 are Elite, 30 are Premier and the remaining brokers are Core.

• Do you expect to expand the number of brokers?

No. Occasionally we add someone that we think has something interesting to offer, occasionally we part ways with someone which can be for several reasons, but generally we have a stable, long-term set of partnerships that we are very happy with.

•  What growth do you see in the broker market?

PCH is the key area for growth.  I think we have only just started to penetrate this market and the potential for growth is huge. I also see a future for used vehicle leasing if supply into the UK tightens and we see inflation on new vehicle pricing and interest rates, especially if the economy slows as we move towards Brexit.

• What are the key issues facing brokers?

Competition.  Brokers, dealers, manufacturers and leasing companies are all alive to the opportunities and I expect to see disruptive new entrants. As a result I also expect a continuing consolidation of brokers.

I also envisage increasing customer expectations as things like including insurance in the lease, greater flexibility over rental lengths and termination rights are driven by consumer demand for PCH.

• Do you see the broker market becoming more competitive?

In the short term, definitely.

•  What is the future shape of the broker market?

I think there will remain a core group of large brokers who concentrate on small to medium fleets, offering good value, a broad range of services, advice and consultancy.  There may be a small number of very large PCH brokers who gain investment to elevate their brands to appeal to a mass audience.

Finally there will be brokers who specialise on areas of the market where expertise and service are essential, for example LCVs, minibuses, specialist equipment, high-end vehicles, alternative fuel vehicles, motorbikes and so on.

• How will more funders in the market alter the broker sector?

I’m not sure it will.  Of course it is important for brokers to maximise margin and find value for their customers.  But it has always been important to provide a good service too and that means compelling offers, quick credit decisions, neat documentation and onboarding and good in-life management of customers so that they want to stay in leasing at the end of the contract.

I think brokers choose to work with companies that have had a long-term commitment to the sector and built the ability to enable their customers to have that quality experience.  They may have more options, but ultimately will still probably choose to place the majority of their business with a relatively small number of key funders that they trust.

• The FCA investigation into motor finance – how will this impact the broker market?

I hope it won’t and don’t believe it should.  The majority of brokers are as aware and responsible in the way they treat customers as anyone in the industry.  Failure to do so threatens the reputation and livelihoods that they have worked so hard to build.

I think the nature of both business and personal contract hire is very different to the emphasis placed on the “equity” in a vehicle on PCP schemes.

Unfortunately we have seen examples of incredibly lazy and poorly informed mass media journalism that has failed to distinguish between hire and purchase products and my fear is that in the short-term this could be damaging.

My hope is that this will become clearer and I expect in time demand to shift from PCP to the simpler PCH offering which should drive the growth away from car ownership.

Read more from Elliott Woodhead

• Click here to find out Elliott’s opinions on the issues facing SME small fleets