BMW Financial Services, which incorporates leasing firm Alphabet, has pulled back from new customers to look after its core business – but that’s not necessarily a bad thing.

News that Alphabet, the all-makes leasing arm of BMW Financial Services, is pulling back from new business while continuing to service existing customers, is a clear signal the credit crunch is here now – and its effects are far reaching.

While it’s tempting to think of BMW Financial Services as part of BMW’s marketing department, it is, in fact, a bank. Just as Ford Credit is a bank, GMAC (the firm behind Masterlease) is a bank and VW Financial Service is a bank. And, of course, the major so-called independent leasing companies (Lex, Autolease, Leaseplan etc) are all owned by banks.

So it would be naive to assume that fleet leasing is immune from the crisis affecting the banking industry. Banks are finding it more expensive to borrow money so they are raising their own interest rates, calling in existing loans and reducing their risk.

Of course, banks owned by car companies have a different set of priorities from those on the high street. Apart from being the most profitable part of the carmaking industry (at least until recently) they also have a role funding new manufacturing investment, new dealerships and dealer stock.

So, given a squeeze on available money, it is not surprising that BMW has chosen to prioritise its own brand and dealer network over funding business for other people. What is surprising, perhaps, is that the move has come at this time.

Car company-owned banks, notably the ones belonging to European and Japanese carmakers, are in a stronger financial position currently than high street banks and, generally, have higher credit ratings. That should mean they’re better placed to obtain funds.

Carmakers have long argued that they are best placed to fund fleets. Honda Finance Europe remains strong and the bank is “in good shape and with a good credit rating”, I was told by Bernard Bradley, Honda general manager.

Peugeot Bank Finance is well rated with the lowest risk in the banking sector, so I am pretty confident with our funding solutions,” said Pierre-Louis Colin, Peugeot UK MD.

So, what will be the implications of the BMW decision?

Earlier this month, analysts at Credit Suisse warned that falling sales across Europe will put many dealerships close to bankruptcy and carmakers are going to have to bail them out if they want to maintain sales coverage. So, in my view, the BMW move is all about keeping what money is available in-house and ready, should it be needed. If other carmaker leasing firms do the same, focusing on core and existing business rather than seeking new customers, that will release some of the competitive pressures in the market place.

The strong pricing position of the captive finance firms would be weakened and independents would be able to operate more freely. A more stable, multi-make market might emerge, but rental rates would rise.