9:00 am, January 28, 2025
Talk of the car finance industry collapsing amid recent controversy is ‘fake news’ according to one leading dealer, who says that customers ‘don’t really care’ what retailers make from the deal.
Malcolm Beattie, of the award-winning MB Motors Ballymena, says that things are very much back to business as normal when it comes to car finance, after initial chaos in the industry in the aftermath of last year’s controversial Court of Appeal ruling against Close Brothers.
Appearing on the latest episode of the Car Dealer Podcast, Beattie said that customers will always need finance and therefore accept that dealers will take a cut as part of the arrangement.
Speaking about how the scandal has affected business, he added that he is yet to hear of any customer who has walked away from a deal as a result of finance commissions.
He told hosts Jon Reay and James Baggott: ‘It’s one of those things. Going back ten years if someone was coming to buy a car and you told them that you were going to earn a few hundred quid for them to get the car, as we have to do today, would they not buy that car? Of course they would still buy that car.
‘People who are looking for car finance need the finance because they do not have the money there to buy. Do they really care that you’re going to make a few extra quid from it? 99% of the time I don’t think they do.
‘It’s the new norm, we are used to dealing with it now. We are used to telling people our commission disclosures. I certainly haven’t heard of anybody saying “No, I’m sorry. I’m not going to buy that car because you’re going to make X amount of pounds”.
‘It’s more like ‘Where do I sign? I’m happy to get the finance, I’m happy to make the monthly payments, I’m happy with the APR. I don’t really care.”
‘I always go back to the example of buying a house or a mortgage. You went to your financial advisor, he told you he was making £1,500 and you just asked “Okay, where do I sign?” because you needed the mortgage.
‘What’s the difference with car sales? Yes, it’s a smaller sale but [dealers] get an extra few pounds in income to pay for FCA licence and staff reports. You’ve got all those overheads to take into consideration.’
‘I think that whole thing has blew out. At the time this happened I saw a lot of people saying there would be no more car finance.
‘I put a video out saying it was all fake news and got loads of hits off it. This is fake news. Finance will be back. Within ten days to two weeks it was all back to normal, you just had to make sure you got your commission disclosure done.’
During his appearance on the show, the talk with Beattie also turned to the now-banned practice of discretionary commission arrangements.
The practice, which allowed dealers to set their own commission, has now been outlawed by the FCA and a potential redress scheme could end up costing billions.
However, Beattie questioned whether dealers should still be able to set their own fees, similar to how they set their own car prices.
He added: ‘Going back in the day, a dealer could choose their finance commission. It’s a business – you’re there to make money.
‘Is it treating the customer differently? You get to choose your car prices and set them to what you want. Is there any reason you shouldn’t also be able to set your finance commission to what you want?’
The Car Dealer Podcast, sponsored by Carwow, sees an industry guest join our hosts to discuss the motor trade’s biggest headlines of every week.
A full list of the stories discussed on this week’s episode can be found here.
You can listen to all episodes of the Car Dealer Podcast on Spotify, or wherever you get your podcasts.
