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Dealers to lease rivals' cars

Date: 27 November 2006   |   Author: Rupert Saunders

Business car managers wanting to contract hire across a range of makes will soon be able to source vehicles directly from their local franchised dealership.

Motor finance company, Capital Bank, which is part of Bank of Scotland, is to launch a new product that will allow its subscribing dealers to tap into Bank of Scotland Vehicle Finance IT systems and bypass local contract hire brokers.

The move will mean local new car dealerships, usually restricted to supplying only the make of car they are franchised with, can offer all makes and models to business car users. It is part of a wider drive by dealers to win back local fleet business from national contract hire operators.

The new finance product will be particularly valuable to business car managers with small and medium businesses who want to build a supply and service relationship with a local dealership. Previously these companies would have been forced to deal with local brokers who might not be able to offer consistency of supply or product.

Paul McGill, director of Capital Bank, said: "There is a need to recognise that contract hire is an increasingly attractive offer to the corporate market, accounting for 25% of new car sales. A significant proportion of these sales are in the SME marketplace where local motor dealerships ought to be retaining the business, rather than allowing it to be supplied by contract hire brokers."

The new dealer-based contract hire product will be hosted on Bank of Scotland's corporate IT system and will allow dealers to quote and propose contract hire deals instantly. Apart from offering multi-franchise new cars, local dealers will also be able to guarantee buy-back terms at the end of the contract.

The launch comes at a time when business car managers and car manufacturers are questioning the role of brokers in the supply chain. They have been accused of "posing a significant financial risk" to the industry because they cherry-pick supply deals and can weaken residual values.

Training teams are currently preparing dealer staff for the launch of the new systems and it will be ready in January.