Each month, Motor Finance analyses results
posted by lessors over the previous four weeks to discover the
latest trends in the industry. Jason
T Hesse
looks at those published in November

In a year in which many captives started
to feel the effects of the credit crunch, Mercedes-Benz
Financial Services UK Limited
(MBFS) fared quite well.

The year ending 31 December 2008 saw MBFS grow its
turnover by 11 percent, from £277 million to £307.4 million, a
positive result. Although operating profit grew by 5 percent year
on year to £31.7 million, pre-tax profit was flat, at £30

The German-owned captive, which changed its name
from DaimlerChrysler Financial Services UK Limited in April 2008,
grew its retail portfolio by 10 percent compared to the previous
year, however.

Of all new UK-registered Mercedes-Benz passenger
cars, MBFS financed approximately 37.5 percent, well over double
the proportion – 15.3 percent – of Mercedes-Benz commercial
vehicles which it financed. Penetration was also high for the Smart
brand of cars, where MBFS financed 59.2 percent of all new vehicle

Although Chrysler Group was sold to Cerberus, the
private equity firm, in 2008, and despite the difficulties
encountered by the firm this year, MBFS continues to provide retail
finance and vehicle stock financing for Chrysler Jeep dealerships.
Indeed, MBFS financed 44.3 percent of Chrysler Jeep-branded cars in
the UK last year.

Last year also saw MBFS sell its wholly-owned
subsidiary, DaimlerChrysler Information Technology Limited, to CGI
Information Systems Management Consultancy Limited in May. The
decision to sell the business was taken following a decision by the
board of its German parent, Daimler Financial Services AG, to
divest from what it termed a “non-core business activity”.

Meanwhile, at BNP Paribas-owned Arval UK
Group Limited
, results for the year ending 31 December
2008 were also positive.

Total turnover at Arval UK Group grew by £570.4
million, or 22 percent, to reach £3.2 billion at the end of 2008.
This was largely driven by Arval UK Group’s fuel-related services,
which recorded average pump price billed to customers increasing by
19.5 pence per litre.

“The company’s revenue and costs are strongly
influenced by fuel pump prices, although we have started
renegotiation of supply contracts to reduce and eventually
substantially remove this influence,” the directors said.

The impact of this on the bottom line was minimal,
though, as pre-tax profit was flat year on year, at £35.2 million.
Operating profit was up by 7 percent, however, to £52.5

The lessor’s financials were also aided by the
acquisition it made in 2007, of Allstar Business Solutions Limited
and its subsidiary Dialcard Fleet Services Limited, which together
contributed £140.8 million to group turnover in 2008, up from £70.6
million the previous year.

As part of a consolidation exercise, Arval
UK Group
also acquired the entire share capital of Arval
Limited from BNP Paribas Fleet Holdings Limited, which is also
Arval UK Group’s parent.

The car and commercial vehicle lessor saw operating
profit fall from £20.2 million to £13.4 million in 2008, which
further translated into a pre-tax loss of £5.7 million, down from
the £7 million profit recorded a year earlier.

The company’s directors, who confirmed they were
continuously reviewing market strategies, also said that in the
near future they intend to grow the company’s market share in
funded fleet and related services.