Fleet News

Cheap funding access may cost the independents dear

CONTRACT hire firms' access to cheap funds has come under the spotlight with the acquisition of two more companies that were formerly independent of both manufacturers and finance houses. The difference in borrowing terms may differ by only fractions of a percentage but, in an industry where deals are won and lost on the basis of pennies per month, cheap finance is still a strong advantage.

Bob Rider, managing director of Masterdrive Leasing and Rental - bought last week by debis Car Fleet Management - said: 'They can give us better funding. We had a permanent funder but the terms were not as strong as some in the market place.'

Ready access to cheap finance also allows companies the freedom to invest in the increasingly costly areas of IT and product development - essential for a fast moving and ever more competitive market. BCH Vehicle Management was acquired earlier this year by Deutsche Bank subsidiary DB Vehicle Solutions, giving chief executive Richard Pepper a view of both sides of the market.

He said: 'It has given us access to cheaper funds and additional credibility by being part of a bank but we are still independent. It is becoming increasingly difficult for independents to compete. To be aggressive, you need access to cheap funds and, if you don't have that, you have to be more bullish on residual values or cheaper on maintenance, and then you are on dodgy ground.'

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