It’s always good to have a leg up on the competition, and Toyota Financial Services has become just that, making it a strong captive partner for the automaker.
Find out what the secret weapon is, and how it works to Toyota’s advantage.
Toyota Motor Corp’s in-house lender is leveraging the automaker’s AA- credit rating and cash to offer low rates and keep customers coming back.
Toyota’s $37 billion cash pile and credit ratings that outrank General Motors Co. and Ford Motor Co. enable its Toyota Financial Services unit to offer more loans and take on riskier borrowers. The operation, with $95 billion of assets, handles more of affiliated dealers’ direct loans and leases in the U.S. than any other automaker’s captive lender, or wholly owned finance arm. Toyota also uses intense data systems to keep buyers from straying to GM or Ford.
“Our strategy is built around loyalty and retention,” said Mike Groff, chief executive officer of the Torrance, California-based finance company. “We’ve deepened our use of data, and analytics of our data, to take better care of customers to encourage them to go back to Toyota and to go back to the seller of the car that they have.”
Competition for U.S. market share has become more intense as Detroit offers its most competitive set of cars in a generation. Toyota’s share of the market was unchanged through the year’s first nine months at 14.4 percent, short of its 17 percent peak in 2009. This week, Consumer Reports panned the company’s redesigned Lexus IS 250.
“Having an extremely strong captive partner opens up a range of possibilities that aren’t open to companies with weak or no captive,” Larry Dominique [president of ALG Inc.] said. “Toyota can definitely be more aggressive on leasing.”