02 Jul 2015 | 11.38 am
BMW Select PCP
02 Jul 2015 | 11.38 am
Personal Contract Plans (PCPs) are now the finance option of choice for the majority of those buying new and used BMW and MINI models in Ireland. Brian Merrigan, Managing Director, says that year-to-date PCPs accounted for 60% of the finance taken out, compared with 50% for all of 2014.
The PCPs are underwritten by BMW Financial Services, which has been operating in Ireland since 2011. According to Merrigan, the operation has consistently been one of the top performers within the international BMW financial services group. “We are number one for growth and efficiency and our lending portfolio is now worth in excess of €300m,” he says.
“What’s particularly pleasing is that in the four years we’ve been in business, no one has handed back a car and walked away.With our BMW Select PCP, all of our buyers have built up good equity in their vehicles over the finance period and have either decided to take out another PCP, or to buy the car. Roughly 20% have opted to buy.The typical period for a PCP is three years, but we’re seeing a lot of people changing late in year two, which is around the time the vehicle becomes worth more than they owe.
“Our customer retention rate is excellent, mainly because the flexibility of BMW Select suits the business and personal buyer alike,” Merrigan adds. “No one has experienced negative equity in their vehicle with our PCP, as residuals were set at an appropriate rate and our vehicles also hold their value very well – at around 50% – compared with other luxury brands.” Merrigan is bullish about the market prospects for 2015. “Based on what we can see so far, it looks promising. We’ll probably see a market of 125,000 unless something unexpected happens,” he says. “We are certainly seeing new jobs being created in our network and dealerships are becoming profitable again. In addition, the 152 plate means dealers can make money throughout the year.”
Merrigan says the availability of finance has made a big difference to the market this year. “When we started in 2011, it was something of a finance wilderness, as so many lenders had either left or scaled right back. Now there are close to ten providers, which is encouraging, as finance is the oil in this industry.”
While BMW Select PCP is the most popular form of finance chosen by BMW and MINI buyers, BMW Financial Services Ireland also offers more conventional forms of finance, such as Hire Purchase and Contract Hire. Says Merrigan: “PCPs are favoured by private buyers and small businesses, whereas fleet buyers often prefer the convenience of something like contract hire, as it includes all motoring costs in one monthly payment.”
BMW Financial Services works with a number of Ireland’s leading fleet and leasing companies, including Merrion, Windsor, Hertz and Avis. Roughly 30% of the finance company’s business is with corporate buyers.
Merrigan says one of the trends reflecting the improving economy has been an increase of around 20% in the amount of money being borrowed by car buyers to either fund bigger models (such as X5s) or vehicles with higher specification packages. “We are also offering good deals such an APR of 3.9% with BMW Select on any 3 Series model to mark the introduction of the 152 plate,” Merrigan adds.
BMW Select is available on all cars within the BMW and MINI ranges, including used cars up to two years old. “One of our strongest selling points is that our finance offer is backed by our own financial services company, so we are underwriting the residual value.That provides buyers with real security,” says Merrigan.
Brian Merrigan, Managing Director, BMW Financial Service Ireland