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April 15, 2010updated 25 Jan 2022 2:38pm

Rush for the regions

Scotland and Northern Ireland look set to provide important business opportunities for motor finance companies in the next year and beyond. Close Motor Finance, whose main base is in Doncaster, is about to set up shop in Northern Ireland, while motor finance broker DSG Financial Services is looking to conquer the Scottish market

By Fred Crawley

High-speed train


Close Motor Finance and DSG set to benefit from gaps in new markets, report Claire Hack and Fred Crawley.


Scotland and Northern Ireland look set to provide important business opportunities for motor finance companies in the next year and beyond.

Close Motor Finance, whose main base is in Doncaster, is about to set up shop in Northern Ireland, while motor finance broker DSG Financial Services is looking to conquer the Scottish market. Last month, motor and asset finance leader, Ignition Credit, announced plans to launch a business in Devon.

Both regions are characterised by a relatively open marketplace with a general lack of competition and an opportunity for both companies to write high volumes of business outside England.

Much will depend on the speed of initial growth in the regions, but both DSG and Close say they are confident they can prosper in their target areas.


Bright possibilities

The future is bright at Close Motor Finance as it prepares to branch out in Norther Ireland, according to deputy managing director James Broadhead.

Three new account managers were put in place in April and will divide coverage of the six counties, as well as Greater Belfast, among them.

Broadhead, who has been with Close for the past 11 years, is heading up the Northern Ireland move, following a number of amalgamations between competitors there.

“Bank of Scotland Dealer Finance [formerly Capital Bank] merged with Black Horse and NIIB is now part of the Bank of Ireland,” he said. “We feel we can offer some value to the dealers.”

The decision was aimed at opening the door for Close to “an ever-increasing number of dealerships” and will see the company working with dealers in their local areas.

It also followed numerous direct enquiries from dealers in Northern Ireland, Close said.

Broadhead added: “We’ve got three people on the ground that handle deals on a local basis. It is an opportunity for us to offer dealers something they might not be getting at the moment.”

The company does not use automated systems for underwriting, Broadhead said, and is not credit score-driven.

“There’s a niche in the market for somebody prepared to work on a more personal basis,” he said.

Close’s main competitors in Northern Ireland are Black Horse, Santander and NIIB, according to Broadhead.

“It is a bit of a sparse marketplace for motor finance companies at the moment, so we feel it is an opportunity for us to do some business,” he said.

“The competitive landscape was fairly crowded 24 months ago. There were a lot of people in the market and it was not somewhere we thought we could write high enough volumes to justify a team of people there.

“That’s changed now and we have the opportunity to write significant volumes of business.”

In the long-term, the company plans to open a new branch in Belfast, but Broadhead conceded this would depend on how well the move into Northern Ireland goes.

He said: “It would be great but it depends on how quickly the business grows – it’s still very early days. It’s a long term goal.”

But he added he was optimistic as 2010 has been successful so far and the rest of the year looks promising.

He said: “So far, it is looking extremely good and we are expecting a good 12 months.”


Introducers left out

However, Close has confirmed it will not be dealing with brokers in Northern Ireland, at least for the moment, meaning it will not be offering respite to embattled firms there.

Introducers have been suffering in Northern Ireland with a diminishing number of funders and will continue to have few places to turn for now.

Indeed, the last few months have been marked by exits from Northern Ireland, with Bank of Scotland confirming it was stopping leasing business there, while Lombard Ireland axed more than 100 jobs in the region in December last year.

Bank of Scotland’s departure saw a total of 750 jobs lost and was coupled with the closure of its 44 Halifax retail branches in Northern Ireland.

Lombard is now the only volume funder for many of the brokers working exclusively in the region, leaving it free to set its pricing as it sees fit.

In November 2009, Barclays was said to be recruiting someone to head up its Northern Irish leasing business but would not be using brokered deals, while NIIB was said to be continuing to lend via brokers, although it pulled back from deals in the construction and haulage sectors.

Close is therefore somewhat unusual in making the decision not only to expand but to move into Northern Ireland, despite the gap in the motor finance market there.

The company said the move has been “a long time coming”, but added there were no more firm plans for other growth in the near future following the opening of a new branch in Swindon earlier this year.

Culled from the Bank of Scotland (Ireland), which stopped taking introduced deals at the end of August and closed down its asset finance unit, the three new account managers already have experience in the Northern Ireland motor finance market.

Mareta Davies, senior account manager, will cover County Armagh, Tyrone and Fermanagh, working with dealers in these areas from mid-April.

Her counterpart, David McCready, will be looking after dealerships in County Antrim and Londonderry, while Nichola Kielty will be responsible for County Down and Greater Belfast.

Competitors Black Horse declined to comment on the move and Santander and NIIB were both unavailable at time of writing.


Looking north

Meanwhile, brokerage DSG Financial Services has expanded from its Manchester office to found a new Scottish branch at Bellshill, south of Glasgow.

While it will use DSG’s central accounting function in Stockport, the new division will be self-sufficient in every other aspect of its mission to pursue a greater presence among Scotland’s 900 franchised dealer sites.

Currently, DSG’s managing director Richard Hoggart is spending Monday through Wednesday of each week developing the Bellshill operation, which will be led by sales director Mark Gow.

For now, the Scottish operation comprises four operations and sales support staff, plus one salesperson. They will soon be joined by a further three sales staff.

DSG formerly had access to the Scottish market through a partnership with another broker. However, this relationship came to an end recently, giving the opportunity for DSG to go independent in the region.

Steep initial growth will be necessary to counter the training, transport and recruitment costs of starting a new business unit.

However, expectations are high – Hoggart is confident that Belshill will write between 2,500 and 3,000 contracts in its first year, compared to an estimated 10,000 in England.

Aiding growth, he says, will be a general lack of competition, mirrored in Northern Ireland, as well as the relative ease with which sales reps can travel between sites compared to their counterparts in traffic-heavy England.

Targeted areas of business will be the “central belt” encompassing Glasgow and Edinburgh, Dumfries and Galloway, and the North East “from Perth up to Aberdeen, and possibly on to Inverness”, Hoggart said.

“Scotland is very important for us,” said Gow, “but we recognise that dealers need to know much more about DSG and how we operate. Every single franchised dealer in Scotland will have an invite over the next few weeks.”

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