NETWORK, the franchised car leasing broker network of contract hire company LeasePlan, and Lex Autolease – the biggest contract hire company in the country – have reduced the number of car leasing brokers they support.
This follows the withdrawal of Lombard from the car leasing broker market – see the Editor’s Blog Lombard ditches car leasing brokers.
Network has reduced its BVRLA-approved leasing car brokers by 48%; and Lex Autolease has terminated around 70 brokers.
While these moves are the operational manoeuvrings of the finance lenders, the impact will be felt particularly on those small businesses that finance cars through personal contract hire (PCH) agreements.
The sources of funding for these type of leases – where you run your car privately but claim back business mileage via AMAP payments – is now very hard to find.
The type of car you choose may not change in the future, but the method of funding it might well do
“To be honest it is affecting brokers of all shapes and sizes, as it tends to be the quality brokers who deal with the funders directly,” commented Paul Bulloch, managing director of Concept Vehicle Leasing, a long-time contributor to Business Car Manager.
“Network have a strict criteria for broker entry, so if you are currently a Network broker you will generally be a better quality broker. For Network to reduce their broker base by 48%, means that a lot of quality brokers will find their sources for funding quite restrictive.”
It appears the major funders are steering small businesses back towards company cars based on contract hire agreements. And towards a group of more select band car leasing providers.
What Network’s owner has to say
David Brennan, managing director of LeasePlan, said: “A central part of Network’s commitment to excellence is to undertake an annual review of the business with our intermediaries, or car leasing brokers. Designed to ensure that our established standards are maintained in relation to customer service and overall business performance, this strategic review is part of our desire to work closely with those intermediaries whose business goals and standards are in line with our own.
“The review not only benefits our business but also cements our reputation as the best intermediary offering in the industry. This rigorous process is undertaken with all of our intermediaries annually and, as a consequence, where standards or performance levels are not achieved will result in us parting company.”
Bulloch said that with funding sources restricted to quality brokers, it will eliminate many of the smaller back bedroom operations that are predominantly price-driven, rather than service-driven.
“I can see the broker market shrinking as a result,” added Bulloch. “I think small businesses will see a different sector in 12 months.”
Lex Autolease was unavailable for comment at the time of going to press, but since then have added the following on 08 October 2009.
The Lex Autolease view
Tony Murtagh, director of broker and small fleets at Lex Autolease, commented:
“Brokers play a vital role in bringing a growing number of customers to Lex Autolease, and we are firmly committed to this important channel. However, in these uncertain times, it’s particularly important that we focus on building long-term mutually beneficial relationships.
“With this in mind, we have undertaken a thorough review of our broker channel to assess the strength of our relationships, looking at a range of factors, including quality and levels of new business. Unfortunately, taking these factors into account, we have had to take the difficult decision to end our agreement with some of the brokers with whom we do business.”
