Marac extends foray into motor vehicle finance market

Tuesday 19th May 2009

Marac Financial Services, the finance arm of Pyne Gould, extended its foray into motor vehicle finance, entering an assurance scheme with Hyundai Motors, as it builds on the void left by GE Capital and GMAC’s exit from the New Zealand auto market.

Marac’s insurance unit will provide cover for up to three months for finance consumers of Hyundai cars who lose their income within the first year of purchase. Marac entered into a finance and insurance partnership with Suzuki NZ last week, and provides credit to customers of Nissan franchises around the country.

GE Capital and GMAC departed New Zealand’s car lending market in October, which has struggled with the demise of finance companies that had specialised in auto credit.

“There are other opportunities at the franchise level” and we’re working at a couple of projects, said Chris Flood, general manager consumer at Marac. The firm is trying to capitalise on the gap caused by “the withdrawal of GE Money and GMAC” last year, he said.

The motor industry declined over the last 12 months, with car retail sales shrinking 0.1%, seasonally adjusted, in March from the previous quarter, its third consecutive contraction. This was an improvement from the February’s 3.2% decline and January’s 12.1% slump.
Hyundai has offered to take vehicles back if a customer is made redundant and isn’t able to continue making repayments. Marac is also underwriting the redundancy insurance. The automaker has lifted its New Zealand sales 4.5% in the past year, compared to an overall collapse in the market of 32%.

Marac Finance posted a 48% drop in first-half profit to $7 million on impairment charges for bad loans, and a downturn in lending. It was the first lender to sign up to the government’s Deposit Guarantee Scheme, and has retained its investment grade rating of BBB- with Standard & Poor’s.

Shares in Pyne Gould were unchanged at $2.10 on the New Zealand stock exchange today, and have slumped 40% in the past 12 months.

Businesswire.co.nz

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