MTF Finance franchise office, Andersons Bay Rd, South Dunedin. PHOTO: SUPPLIED
The motor trade franchise company generated $515.3million of new loans for the year to September 2019 — down from just under $600million in loans in 2018.
Based in Dunedin, MTF’s shareholders include Turners Finance and Honda NZ, and it has a network of 46 franchised car dealerships around the country.
MTF chief executive officer Glen Todd said most of the sales decline, about $71million worth, was due to Turners consolidating its finance business under its Oxford Finance umbrella, including the recourse business they had previously written with MTF.
MTF’s share of those sales dwindled to $600,000 from $42.4million in 2018.
‘‘The non-recourse arrangement was for a two-year term, starting in 2016. Turners chose to integrate all their finance business into their Oxford Finance business, as part of a revised strategic direction that focused on vehicle sales and auctions, rather than finance,’’ Mr Todd said.
After accounting for a gain on fair value of $4.4million, underlying profit after tax dropped by 8.6% to $8million for the year to September 2019, from $8.7million for 2018.
The company paid $66.5million to its 317 originators in the form of commission, fees and payment waiver and also declared a full-year dividend of 14.51 cents (2018: 15.32 cents) a share.
Mr Todd said replacing lost business was now a priority for the company.
To that end the company had partnered with Trade Me motors, an initiative rolled out in January 2019, delivering sales of $12.6million and creating a ‘‘complementary digital channel’’ for future growth of the business.
‘‘However, reduced momentum in domestic spending has led to a drop in vehicle registrations after five consecutive record years.
‘‘Consequently we are seeing a reduction in consumer demand for finance and increased competition for that business, contributing to margin compression,’’ he said.
