fender neil

Cambridge & Counties Bank (CCB) has reported strong demand for classic car finance after it entered the market last year.

It loaned £5.3 million to fund classic car acquisitions during 2018, exceeding business forecasts.

As part of its new venture, it became an official partner of the Federation of British Historic Vehicle Clubs (FBHVC), providing £10,000 in student bursaries to support the Federation’s Heritage Engineering apprenticeship scheme.

CCB reported record results overall last year, with total assets rising to £1.03 billion, up 17% year-on-year, while pre-tax profit increased 14% to £27.9 million. Loans and advances to customers increased from £690 million to £769 million.

Neil Fender, head of classic car finance at CCB, said the success of the classic car offering was driven by the specialist expertise within the bank.

Fender added: “Our unique selling point would be that we absolutely have an understanding of the vehicles. We genuinely love the cars and want to make a contribution to the development of the classic car movement within the UK.”

Beginning his career in banking, predominantly in the commercial sector, Fender (pictured in a Jaguar XK120 at Le Mans) spent more than 30 years in banking, while building on his experience in classic cars as a hobby and business.

His blend of banking and classic car knowledge underpins CCB drive into this market.

AFI Q&A with Neil Fender

AFI: How do you go about vetting the classic car dealers you work with?

NF: What we’ve chosen to do in order to proof our model and make sure that we are fit for purpose and able to offer a good service is we’ll use brokers and intermediaries. They have the classic car dealers already setup with the appropriate regulatory requirements. We are also starting to gradually build our own portfolio of dealers.

AFI: How many classic car dealers do you work with at the moment?

NF: We have a low-volume, relatively high-value target market. We’re still quite a small team and dealer numbers are steadily growing; we’ve probably got about a dozen dealers that would refer business to us. Unlike the modern car world, classic cars are predominantly still purchased with cash, so finance is still a relatively new concept. We continue to be predominantly supplied with referrals from a small selection of specialist classic, race and super car brokers.

AFI: What is the profile of customers who are seeking finance for classic cars?

NF: The sort of customer we are profiling are all high-net worth individuals, or who run their own businesses successfully; they all have good strong income streams and are professional people but they just don’t have the liquidity in order to make that purchase at that time. What’s happened with classic cars over the past 15-20 years is that the “jaws of growth” between somebody’s income and the price of certain classic cars have widened a great deal. Going back to 2008, if I had the wherewithal to buy a Jaguar C Type for £800,000, the same car actually sold at auction last year for £2.4 million. The people that we’ve got on the portfolio tend to be serial collectors who have a number of cars. The interesting part, is that you may think people have a preference for a super car let’s say, or a classic car, or a vintage car, but that tends not to be the case in our experience.

Our clients like all sorts of cars, and I’d say that they have a love affair with the internal combustion engine in all its evolutionary forms, from 1920 through to 2020. Even electric hybrid supercars are within their sphere of interest. So, it’s very rare that someone says that they like vintage cars and that they don’t really care about anything else. It would be entirely possible to find a customer that drives a supercar, owns a top-end classic car and also has a vintage race car for example.

AFI: How do you value the classic cars that you finance?

NF: Having been in and around classic cars for 30 years, I know the value of the vehicles and if for some reason I don’t, I have a network of resources and people available to me that can help us define the market value for the vehicle. In addition to that, we have absolute protocols set out to have proper valuations done where necessary. These would be done by the traditional third-party specialists. So, we have values based on retail prices, my knowledge of the market, or my networks knowledge of the market and then as a backstop we have valuers.

AFI: What are the benefits of the bank becoming an official partner with the FBHVC?

NF: The age demographic of people interested in the classic car market has increased. Therefore, bringing new and usually younger people through, giving them the opportunity to complete apprenticeships and providing them with the financial acumen to run their own business, is what was behind becoming a finance partner with the federation. The reason for doing it was to make a contribution towards the development of the motor industry and British heritage.
CCB provides bursaries for the apprentices as they come through, but we are actually developing a finance model as part of their apprenticeship to give them the confidence to restore cars and the financial understanding of how a business runs.
We provide them with a module on their course that helps them understand the relevance of banking and managing finance, VAT and tax returns and all the costs of running a business. It’s purely about doing something using our experience that gives back into the classic car market and British heritage.

AFI: As a result of the partnership, does the FBHVC recommend CCB to members?

NF: Members of the federation who understood our contribution could do that voluntarily but that’s not something that we’ve driven into them at all. Our business with the federation was all to do with trying to add value into the marketplace, and there is no requirement on them to do anything to promote finance through CCB as part of the ongoing relationship. We are more than capable of developing business through our own means, without doing that with the Federation. It would be very nice if somebody made an enquiry about financing classic vehicles, and it was because they’d seen the work that we’d done with the federation and supported it; that would be a testament to our position.

AFI: How does the Heritage Engineering Apprenticeship scheme work?

NF: The apprentices are all employed to some extent within classic car restoration businesses all over the country. They have block weeks of tuition on mechanical-work, paint-work, trim-work etc. and then apply their learnings into the working environment. As far as the business module is concerned, I have seen it so many times in the commercial-banking arena where people set up to do what they do best, but one of the things they fail to consider is actually ‘how do you bank this?’ and it’s not something that’s often given enough focus, in terms of setting up a business.

AFI: For the future, does the bank see itself moving into mainstream auto finance?

NF: If you imagine mainstream auto finance as a motorway; it’s very fast, very competitive, and the market is full of people offering outstanding finance packages. It’s a very mature marketplace and I don’t think CCB has any aspirations to go there at all. We are in a niche, we understand the market outstandingly well, and we’re more on a B-road than the motorway, but it’s a market we understand very well and somewhere we can add value to.