AS the lock down continues, Leasing Broker Federation members are reporting reasonable levels of interest, but a slow down in business.
Individuals and companies are holding back on leases waiting to see how the pandemic develops and for how long the country will be in lock down.
While many LBF members have robust online business strategies in place, the biggest issue immediately is the inability to deliver or collect vehicles as logistics companies pull back.
LBF members are working with businesses to extend car and van contracts as well as mitigate potential charges. Businesses may be suffering financial difficulties, while others may need to extend contracts during or have concerns around mileage excess charges due to the increase workload.
While some fleets are left idle during the lockdown, other operators have seen increased demand.
New car sales plummeted in March as the Covid-19 pandemic took hold, down 44.4% to 254,684 vehicles.
However, one piece of positive news was that sales of battery electric vehicles jumped almost 200% while plug-in hybrids rose 38% according to the latest figures from the SMMT.
This increase reflects changes to company car tax which came into effect at the beginning of April.
The impact of the coronavirus pandemic on individual finances could mean that the post-crisis motor finance sector could potentially look quite different.
With millions of people having to access Government help to support their personal finances, current methods of credit scoring applicants could have much decreased relevance, said Startline Motor Finance.
Chief Executive Paul Burgess said: “Whenever things return to relative normality, we’ll be looking at a UK working population, both employed and self-employed, whose personal financial situation will not be as simple to read as previously.
“Motor finance companies are very likely to have to think again about how they assess individual creditworthiness and we may well find that the market segmentations that we use now such as prime, near-prime and sub-prime have shifted.”
Burgess believes that unprecedented government intervention, there is likely to be a fairly steep rise in unemployment.
“We’re seeing predictions of the unemployment rate doubling from its pre-crisis rate to about 7%, which is clearly a significant jump. The perception that employment has become more precarious will also create difficulties.”
Burgess said that instead of just using a one-size-fits-all scorecard approach, motor finance companies to talk more to individuals about their finances.
He added: “Our whole near-prime business model is based on being able to use a combination of technology and people skills to recognise applicants who remain good credit risks despite some points in their finances that don’t match a traditional prime lender template.
“Looking forward, we believe that this is going to be an extremely useful skillset for us in the post-crisis world. While it is difficult to predict how the used car market will bounce back, there will undoubtedly be a degree of pent-up demand released, so the motor finance situation is something that may need to be resolved quite quickly and at short notice.”
The Leasing Broker Federation would like to know how your business is dealing with the current situation. You can email Managing Editor Chris Wright:
