In 2008 something happened to change the finance industry worldwide for many years if not for good. The collapse of the sub-prime mortgage industry, whilst a disaster for all mortgage lenders and intermediaries, actually had a positive effect on the motor industry.
Let me explain. For years estate agents, politicians and car dealers were generally considered to be the most untrustworthy people employed in the most untrustworthy professions. But when the banking crisis hit, whilst estate agents and politicians were still considered to be untrustworthy, they were now joined at the bottom of the league table by mortgage companies, financial advisors and bankers.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
On the other hand car dealers and motor finance brokers started to become a little more acceptable, albeit that some brokers would still advertise lease deals that either didn’t exist or were advertised in a misleading way. But with the introduction of tighter controls over vehicle finance making it more difficult for dealers to be "creative" and with greater legal powers passed to consumers the industry started to gain credibility and trust.
The damage caused to the mortgage and banking industry was far more extreme than anything else we had seen for many years because for once it was the providers of finance, rather than intermediaries, that were seen to be operating in an illegal and unethical way. IFA’s, mortgage brokers and estate agents were always viewed with caution but the lenders and the banks had generally been trusted. But this has all changed now and it will take a long while for the industry to ever be trusted again.
My fear now is that having taken to the higher ground, strengthened as a result of the more recent increased scrutiny imposed by the Financial Conduct Authority, the motor industry is now about to follow suit and undo all the positive work put into making the industry trustworthy over the past 7 years, thanks to VW.
It started with the company falsifying emissions results through the clever use of technology, albeit that the falsification of emissions data related to just NOx gasses and not the all important CO2 emissions. Now the problem we face here is not the fact that the higher NOx gasses could lead to poor health and even death in humans. Let’s be honest, it is unlikely that deaths from breathing in unhealthy gasses in the atmosphere could actually be blamed on just one car manufacturer. The real problem is the fact that they lied and cheated.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe question is now being asked, could other car manufacturers have been up to no good? And where does it end? Have manufacturers been temporarily fitting safety devices in order to improve their NCAP safety rating? We all know how wildly inaccurate the miles per gallon figures are but what else have they been up to in order to make their cars appear safer, greener or more efficient?
Whilst the SMMT dismiss the drop in new car sales by 1.1% in October for the first time since 2012 I fear this could be a trend. We expected VW sales to drop, they did by 10%, but other manufacturers such as Ford have also suffered a drop in sales. As VW announce that they may have found issues with CO2 declarations in some petrol cars the problems will continue to escalate. All we need is for one other manufacturer to be found guilty of something similar to VW and the whole industry could slip even further into disrepute. I watch on with great interest.
Graham Hill is an NACFB board member and director of GHA Finance
