Provident to sell Yes Car Credit; report £6.2 m loss |
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Thu, 15 Sep 2005 13:05
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LONDON: Provident Financial could do well to haul up it subsidiary Yes Car Credit, else losses from this auto-finance firm could drive it in the red. Provident reported a drop in first half profits despite encouraging returns from overseas offices.
Provident said it was considering a sale of the accident-prone division after it posted losses of £6.2 million for the six months. In the same period last year it had made a profit of £5.7 million suggesting the car finance lender was heading for much worse.
Provident chairman John van Kuffeler confirmed that the other divisions of the group had been “delivering good results” with the exception of Yes. Overseas operations, particularly in Europe and Mexico, were posting healthy returns. He added that Yes would be under strategic review and a new management team would try and steer it back to profitability.
Yes Car Credit is a door-step lender providing auto-finance to people with poor credit histories. Mainstream lenders would simply deny loans to such consumers. Yes not only provides the loan but also sells second cars to many of its borrowers.
Yes’ business strategy appears similar to its parent Provident who offers high interest loans to low income borrowers. That may explain why Yes seemed like an attractive buy at £77m for Provident when it had acquired the firm. Besides, both share many of the same customers. Unfortunately for Provident, Yes has since been heading for disaster. Provident could be expected to overhaul the management again if the current team fails to deliver.
Many reasons are given for Yes’ poor performance. These range from the high cost of fuel to a slowdown in consumer spending.
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