Booming BMW overtakes lenders with offer of financing for Irish customers
Published 05/12/2010 | 05:00
IT ISN'T only Germany's financiers who have been pulling the economy's strings in recent weeks -- the cars it manufactures are also beginning to enjoy boom times here once more.
The group that includes Audi and Volkswagen, as well as the Czech manufacturer Skoda and the Seat brand from Spain, is now by far the largest seller of cars in Ireland, while both Mercedes-Benz and BMW have kept very large market shares.
More importantly, sales for next year look exceedingly good, with BMW saying that its order book is already double the size it was at this time last year.
The company, which lost some important dealers over the last few years, says its remaining dealers are moving back into profit and beginning to recruit again.
Now BMW has brought its own financial institution to Ireland to ensure that "good prospects" among their customers do not suffer from the current credit squeeze.
Financial products, which were previously available in Ireland via a third-party provider, will be available on new and used BMWs, Minis and BMW motorcycles.
BMW Financial Services will directly provide finance products on its vehicles. The scheme will also be extended to other manufacturers.
It only received a licence from the Financial Regulator on November 22, but in just over a week 100 firm deals were signed up.
The BMW company already has three million customers worldwide and made €1bn profit last year.
However, one of BMW Financial Services' main products, its Select car scheme, which finances the majority of BMWs (60 per cent) and Minis (68 per cent) bought in Britain, could provide a lesson for dealing with negative equity in both cars and houses.
People who chose the Select scheme in the past -- or who do so now -- are guaranteed a fixed value for their car at the end of the finance period, usually three years.
If the price at that time is more than the previously agreed value, then the customer can keep the difference. If it is less, then BMW takes the hit.
The company took a massive bath worldwide over the last few years when prices slumped -- especially in places like Ireland, where the VRT changes caused enormous price falls.
However, it meant that the customer had kept his or her investment in the car and could go to purchase another one with the same equity and peace of mind.
BMW says: "One of the key drivers in the Irish car market is the availability of credit.
"With the decreased availability of consumer credit and the disappearance of many former motor-finance companies, this is the right time for us to be making this investment."
By guaranteeing future prices, it is also giving certainty and keeping customers in a time of turmoil.