Looking back over 2007, impressions of the year are overshadowed by
the credit crunch and its knock-on effects on the UK economy. A
headline from Motor Finance’s April edition seems prescient: US
mortgages cause trouble for motor finance house. The financier in
question was GMAC, whose ResCap mortgage subsidiary reported
pre-crunch operating earnings in 2006 of only $182m – down
substantially from 2005’s comparable figure of $1bn. This was coyly
described as an “earnings setback” by CEO Eric Feldstein – but it
was a warning sign of things to come. Closer to home, the CBI
announced in its quarterly update on December 17 that the economic
forecast for 2008 is one of slowing growth, blighted by the “twin
shocks” of the credit crunch and commodity price rises. Next year,
it says, unemployment will rise, GDP growth will slow to 2 per
cent, rather than the previously predicted 2.2 per cent, and growth
in consumer spending will fall to 1.9 per cent from 3.1 per cent in
2007. Maryann Tan takes another look at how motor finance and
fleets are affected in our news feature on p11 – and finds the
outlook is bleak.
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In a climate of tightening margins and high competition, making
money from continuing operations should become more of a priority
for financiers and lessors alike. But what about radically
overhauling products and services to offer something completely
new? Brian Rogerson asks the motor finance industry about
innovation on p14 – and finds that in many cases, the secret to
improved profitability may lie in improving processes, rather than
chasing the chimera of eye-catching new initiatives. But there is
still a place for the good old-fashioned art of spotting a market
niche and tailoring a product to fit it, as innovation advocate and
Motor Finance columnist Professor Peter Cooke points out, on
p15.
If 2007 proved anything, it was that there was no limit to the
number of press releases which companies could send out proudly
boasting of their green credentials. While some were no more than
‘greenwash’ – one in particular comes to mind of a nameless company
boasting of its new hybrid “fleet”, which upon further questioning
turned out to consist of just two vehicles – both fleets and
finance houses must now accept that with the environment riding so
high in the public eye, evidence of a commitment to reducing
emissions is becoming more and more a necessity, not just an
optional extra. Although perhaps someone ought to explain this to
the US administration, as news comes that they have “serious
concerns” about the treatment of developing countries’
responsibilities in the terms of the just-signed Kyoto-replacing
Bali treaty on emissions cuts, almost before the ink of the
signatures has had a chance to dry. Plus ça change, plus c’est la
même chose – or, in other words, some things never change.
Wishing you a very happy, relaxing and enjoyable festive break, and
with very best wishes for a profitable and productive New
Year.
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