The car retail and hire purchase
division of financial services group Cattles, Welcome Car Finance
(WCF), has grown its pre-tax profits for the six months to June 30
2008 by 88 per cent compared with the same period last year, to
£3.7m (H1 2007: £2m).

Vehicle sales across WCF’s 12 outlets grew by 10.8 per cent to
7,455 units, boosting income by 12.8 per cent to £58.6 per cent (H1
2007: £51.9m).

The average value of hire purchase deals agreed with WCF
customers rose slightly, from £9,600 in full-year 2007 to £9,800
during the first six months.

Describing the performance of the Cattles group as a whole,
chief executive David Postings said: “Demand for the group’s
consumer finance products has continued to grow. The business has
further tightened its credit criteria to new applications, taking
account of the pressure on household budgets. This has led to a
lower acceptance rate and reduced volume growth compared to
previous years.”

Instalment arrears, Postings said, ticked up slightly to 7.2 per
cent from 7 per cent as at full-year 2007, while customer balances
with a proportion in arrears climbed to 31.4 per cent, from 29.2
per cent at the end of last year. The loan loss ratio stood
unchanged at 8.4 per cent.

Cattles’ total new business volume for H1 was £661m, virtually
flat compared with H1 2007’s £659m, largely as a result of a
reduced acceptance rate of 5.2 per cent (H1 2007: 6.3 per cent),
while group pre-tax profit rose to £70.2m, up 16.8 per cent.

The to-date results were “in line with expectations”, Postings
concluded.

Earlier this year, Cattles announced that it was to stop
offering hire purchase through third parties such as brokers (see
MF May 08), which has caused “an expected reduction in volumes” of
4.4 per cent to £194.4m, of which almost £75m was for hire purchase
for vehicles sold through WCF.

“The full volume impact of this decision will be seen in the
second half as applications in the pipeline from third party
introducers have now been processed,” Cattles said.