Not All Doom And Gloom

Thursday, 19. March 2009

Last week I attended Motor Finance Europe 2009, one of the most important events of the year with regard to identifying how the European motor industry and the finance sector in particular is coping with the downturn. So I packed a couple of bottles of Paracetamol in the briefcase along with a couple of razor blades as I was totally convinced that by lunchtime I would be feeling more than a little suicidal and these events are normally held in rooms with no windows so no chance of jumping out of a tenth floor window as there wouldn’t be one! But it turned out to be far from the doom and gloom of my expectations. Of course the conference opened as one would expect with a few facts and figures regarding the current position we find ourselves in. Professor Peter Cooke, professor of Automotive Management at the University of Buckingham and I should add fellow writer for the journal of the industry, Motor Finance, kicked things of by explaining where we were at the moment and it was looking pretty bleak. There has been a severe drop in manufacturing and sales as we know, funders are clearly running out of money as banks switch resources to other areas of lending and those that rely on the money markets to borrow money with which to lend find that there is virtually no money changing hands and when it does it is at very high interest rates. Clearly one area that really needs to be addressed is sub-prime as this will become more important as more businesses and consumers run into difficulties then find themselves turned down for car finance. There are very few lenders left in this high risk sector but as we heard throughout the day – all is not total doom and gloom. Whilst new car sales are expected to be down from 2.2 million to 1.7 million this year in the UK that still means that new cars are being sold. There was also a strong feeling that sales will come back, maybe as early as next year but clearly there is a need for education. When it comes to car finance people and businesses need to know the options along with the inherent risks and rewards. As we know cars don’t last forever so the market will never die and with proper education more cars will be sold and leased. As I have always said you should put finance first. This view was shared by Peter Cooke when he said ‘Will the future be a case where the motor car will be sold first as a financial services product – and second as a shiny new or used car’. I know the answer, I’ve just got to spread the word. By Graham Hill