Europe Report: Nonprime Player Shuts Its Doors to New Business

Park Motor Finance closed its doors to new business as of Aug. 26, and Roger Gewolb, former chief executive of Park, has left the company.

The decision to stop lending was taken “in light of the continued poor conditions in the credit markets and uncertain economic times”, said Maureen Coen, head of European conduit finance at Credit Suisse, which provided backing for the nonprime motor finance specialist.

Brokers that included Park Motor Finance on their funding panel have been told that Park will no longer take on new motor finance contracts.

It was announced that Gewolb’s minority stake in Park Motor Finance and its parent company Park Acquisitions Ltd. (PAL) has been acquired by Credit Suisse, meaning PAL is now a wholly owned subsidiary of the investment bank.

The current Park Motor Finance portfolio — comprising around 22,000 U.K. customer accounts — will continue to be serviced, but the future for the company’s staff is unclear, and Credit Suisse may well decide to sell the loan portfolio to a third party.

FIAT RINGS UP FLEET DEAL WITH NOKIA
The mobile phone firm Nokia has chosen a 72-strong fleet of Fiat 500 superminis for a new promotional campaign.

The vehicles will be used by student “brand ambassadors” in 18 key cities, who are tasked with traveling to “streets, parks, beaches, and parties, to help the public unlock the full potential from their [Nokia] phones,” Fiat said.

The fleet of 500s will be run on contract hire for between three to six months, with finance arrangements made through Fiat Group Automobiles Financial Services.

Fiat claimed that the 500 also had strong appeal to fleet buyers on the residual front, with a typical retained value of 47% after three years for the entry-level 500 1.2 Pop variant.

LEASING AND CONSUMER FINANCE ‘VITAL’ TO U.K. ECONOMY, SAYS REPORT
The economic impact of the members of the Finance & Leasing Association (FLA) has outstripped that of the hotel business and the aircraft/spacecraft industry, according to a study carried out on the association’s behalf by Oxford Economics.

The report, FLA Members’ Contribution to the U.K. Economy, is the first-ever study of its kind of the finance industry. It concluded that FLA members directly injected £7.6 billion ($13.9 billion) into U.K. GDP in 2007. Some 167,000 jobs are supported by asset, motor, and consumer finance in the U.K., while 28% of business capital investment was put down to the work of FLA members, the study found.

FLA members were found to finance £5.6 billion ($10.3 billion) of consumer expenditure on new cars, and a third of total spending on cars. New car finance was named by FLA consumer finance members as the most important use to which consumers put their funds, with used car finance the fourth most important.

AUGUST STATISTICS PAINT A GRIM SCENE FOR RETAILERS
The month of August saw the lowest number of new car sales since 1966, according to data released by the Society of Motor Manufacturers and Traders. Although traditionally a slow month for sales, August 2008’s total of 63,225 registrations is 18.6% down year-on-year.

This figure occurs in a year that has seen sales fall 3.8% so far compared with the same span in 2007. As the number of new cars sold continues to drop, so, too, does the number of finance sales opportunities for finance houses.

The situation will crystallize further as sales figures for September unfold. Although September is usually a strong sales month due to the new license plate, the SMMT has predicted a 4.6% decrease in figures year-on-year for 2008.

FIRST FINES LEVIED FOR PPI MISSELLING IN MOTOR RETAIL SECTOR
Five car dealers have been punished for failings in their payment protection insurance (PPI) sales processes — the first financial penalties imposed on companies from the motor retail sector.

The Financial Services Authority (FSA) fined the dealerships a combined total of more than £175,000 ($320,000) for “shortcomings” in the sale of PPI alongside car and motorbike loans.

Among the shortcomings identified by the FSA in announcing the new round of penalties was a failure to gather enough information on customers on such topics as employer benefits, preexisting medical conditions, and existing insurance cover.

The FSA reported that certain of the fined firms have stopped selling PPI as a result of the investigation.

—Courtesy of Motor Finance magazine