MTA keeps watching brief on Motor finance sector

MTA keeps watching brief on Motor finance sector

The Motor Trade Association that has represented the Motor Industry for nearly 100 years, said today that it is carefully watching changes in motor vehicle finance sector, and wants to ensure that Dealers, Brokers and ultimately the public have an array of competitive options for automotive finance.

The number of companies offering auto finance in New Zealand has reduced dramatically over the last decade from a combination of the Global Finance Crisis, the exit of several international companies such as GE Money and GMAC and the increased compliance regime adopted by Government, especially for non-bank deposit takers.

In particular, MTA is keeping a close eye on the very public jousting by two NZX-listed companies Heartland Bank and Turners, to acquire part or all of Motor Trade Finance. MTF is owned by dealers and brokers involved in the motor industry and has a large shareholder base. Both corporates have a growth strategy including the acquisition of both small and larger finance companies, so their ultimate intentions are fairly clear.

New MTA National President Dave Harris commented “Motor Trade Finance has played a very important role in the auto industry for 45 years as a co-operative style finance company, owned by the companies that originate the finance contracts. If shareholders decided to sell out to corporate interests, which they are entitled to do, it would certainly change the dynamics of the finance sector. Our understanding is that there is at least one formal due diligence process underway with Heartland, while Turners continues to accumulate shares.”

MTA believes a true cooperative finance model has been, and still is, fundamental to the successful operation of the vehicle sales sector. In particular, it has provided a fair distribution of profit in that sector, reflecting the dealer's risk on recourse. As many of the MTF originators are also MTA members, Harris says MTA will need to ensure its members receive guidance on the options they have.

“We will carefully watch as the Heartland and Turners corporate plays take their course and should the MTF cooperative model disappear as a result of the current market activities, MTA would consider alternatives to recreate the concept for the benefit of its members” he concludes.

ENDS

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