Cranleigh

Lombard, the asset finance division of the RBS Group, is actively seeking funding opportunities in road transport, bucking the trend which has seen several lenders leave the market since 2008.

Lombard’s head of commercial transport, Derek Pridmore, says it is not the case that operators looking to fund new vehicles have little choice but to use manufacturers’ captive finance offering.

“We financed £250m of truck sales in 2011, making Lombard the biggest single funder of CVs in the UK,” he says. “We want to do more and are actively seeking new opportunities.”

Pridmore says there are several benefits of using an independent lender like Lombard.

“We are one of the few in the market who are brand neutral. We also take the risk on residual values, so we can offer a competitive, complete end-to-end solution,” he says.

In 2011 60% of Lombard’s business in the CV sector was debt funding, including hire purchase or similar, 30% were operating leases and 10% some other vehicle.

“Operating leases are growing in popularity,” says Pridmore. “They help reduce the risk on residual values, improve cash flow, and for the time being the vehicle can be classed as an off-balance sheet asset.”

Lombard’s typical term of an asset finance deal remains 54 months, a figure that has not changed in the last four years.

Pridmore says many truck makers are looking to do two year deals on Euro 5 trucks so they will get the vehicles back when residual values peak as Euro 6 becomes mandatory in 2014. Operators are already looking to stock up on Euro 5 trucks to delay the purchase of heavier, more complex and dearer Euro 6 versions.

“We have benefited from the uptake of Euro 5,” he says. “Registrations are up 26% and our book is up 34% so we outperforming the market. By the end of 2013 it will be a desert out there. But we are not pushing our customers to accept short term funding on Euro 5. If they want a three year deal to hedge their bets so they either go to Euro 6 or extend the deal on Euro 5 that is their choice.”

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