Black Horse: New innovations hit
market

John Woolley explains how to stay ahead of the field to Brian
Rogerson
 
 
 

When in 2006 John Woolley assumed the managing directorship of
Black Horse Motor & Leisure Finance (Black Horse) it proved to
be at a rather defining time. Following three or four halcyon years
the automotive sector had become static with falling sales,
reducing margins, new pressure from captives and declining sales of
PPI following regulatory changes relating to the sales
process.

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“The last 12 months have not been without challenges. Although some
of the downturn was cyclical, some was not. No-one, for example,
could have foreseen that the changes to the Enterprise Act would
lead to a ballooning of individual voluntary arrangements.

“In addition, lenders have to accept the different ways in which
borrowers perceive their debts nowadays. The traditional moral duty
to discharge debts, being in debt and acceptance of arrears has a
different priority in the minds of many borrowers,” Woolley
says.

As a result Black Horse has innovated. “The standard finance model
is no longer appropriate for the market. Taking a portfolio
approach to risk, principally based on the age of the vehicle to be
financed, does not allow lenders to offer their dealers the
flexibility enjoyed by the direct lenders. Over the long term the
result has been continued downward pressure on margins and falling
penetration at the point-of-sale,” Woolley explains.

As a result Black Horse is piloting a rate-for-risk programme which
more closely links customers’ rate to their risk profile. “In this
way we are effectively helping the dealer to qualify their
customers,” he notes.

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Woolley stresses that motor dealers’ attitudes to finance and
insurance (F&I) products have to change: “When a dealer is
aiming for commission income from F&I it must be achieved in
smaller but more regular amounts. Earning occasional large
commissions, when the opportunity arises, invariably leads to
problems with early settlement and customer dissatisfaction.”

Technology boost

Woolley is justifiably proud of the company’s innovative
LetsUConnect (LUC) dealer finance system which was launched in
October 2006. “In situ,” he explains, “LUC gives dealers total
control over every aspect of their finance business, making
accessing and processing information much simpler than before – and
far less vulnerable to fraud. It also incorporates electronic
signatures.” So far some 2,500 dealers have signed up for LUC with
a further 4,000 due to be online by the end of 2007. It is
available to all motor dealers and the system recently won the
“Innovation Award” at the 2007 Motor Trader Awards in London.

LUC also increases efficiencies. In fact Black Horse employs fewer
account managers than 18 months ago but those remaining are far
more effective, Woolley says: “Newly-appointed account managers
receive comprehensive training cumulating in a two-week induction
course in our Nottingham training centre, which includes technology
training. As a result, and following field supervision for a time,
they are able to conduct properly-constructed business reviews with
senior staff at dealers. The discussion then centres around key
performance indicators and performance reviews.”

Smaller, more remote dealers are encouraged to link into the
company’s new Sales Consultant Channel whereby Black Horse
office-based staff deal with proposals and queries from the field –
backed up by occasional account manager visits. “It is a question
of matching business needs with resources,” he said.

Most recently Black Horse has launched Finance Direct, an
initiative which aims to retrieve PPI and GAP penetration on a
post-sale basis. “It is vital that we continue to try and sell
F&I products when dealers are unable to because they are not
FSA regulated. Since Finance Direct is generally non-intrusive it
does not jeopardise the sale of the vehicle,” Woolley says.

During the time Finance Direct was piloted, Black Horse
successfully converted over 70 per cent of customers referred to
them. Dealers earned around £200 commission per deal and in many
cases rejuvenated their F&I income stream.

Woolley believes the company has worked hard over the last 12
months to prepare itself for a cyclical upturn in trade. He is
prepared for ongoing dealer consolidation and confirms that Black
Horse’s product offerings satisfy the requirements of the largest
dealer groups. The company enjoys a high market presence in the
caravan, motorcycle and small fleet sectors as well as black cab
financing. Joint venture relationships with Mitsubishi, Suzuki,
Lotus, Hyundai, Kia and Proton are ongoing and provide a valuable
source of good-quality business.

“We expect regulation to continue placing further demands on the
industry,” he says, “and we await the results of the Competition
Commission’s deliberations into PPI. But the investment we have
made in technology and new product innovations, together with the
best staff in the industry, make me very optimistic about the
future. We have ambitious growth plans and are constantly keeping
our eyes open for further opportunities.”