So the Most Exciting Time for Automotive Finance in U.S. & Global Markets is Coming (or Is It Already Here?)
The Situation: The way vehicles will be financed, supported, sold, and cycled will undergo dramatic changes and evolutions in next few years. Innovative financial products that are not even offered today will become a part of the standard “F & I Package” at the dealership.
What Daimler is saying about this big change in auto finance: “The most interesting time for automotive finance lies ahead; this will be an exciting time for financial and mobility services.” — Klaus Entenmann, Director of Daimler Financial Services
What and Who will make this happen? And When?
- OEM and Captive Finance company arms are leading the way. [Daimler, VW, Toyota]
- New Financing Incentives being offered now to sell more new & used vehicles.[Called All-In-One packages]
- Auto financing & leasing will be even more critical to the sale of vehicles. [Take note of what Toyota and Honda Finance are doing & have been doing to sell vehicles.]
- Package finance and services offerings will be major contributor to OEM and dealer revenue. [Allstate is selling insurance agencies directly to major dealers right now.]
- Buyers or consumers will be even very aware of the residual value or rate of depreciation for the vehicle they are financing or leasing. [ALG, Kelley, & Intellichoice]
- Customer services and CRM to be part of the “Sales Package” offered by financial institutions. [Loyalty programs and Customer Communications]
- Electric vehicle financing and packages will propel sales including Hybrids and Alt-fueled vehicles. [Volt package beginning to get there.]
- Separate Battery Replacement agreements are being offered by manufacturers. [Lithium batteries now offered for rent by & for Daimler Smart Cars.]
- Vehicle financing as done in U.S. to be migrated to BRIC countries and Africa.
- 75% of new car sales in U.S. are financed, so this market & profit center will be expanded and experience growth. [Buy-Here Pay Here Market, too]
- VW offering all-in-one finance packages including insurance & maintenance. [This ultimately will be how VW overtakes Hyundai & Toyota in U.S Market.]
- Flexibility in finance packages to switch vehicles or terms during the financing period. [Move the finance package to one or more other vehicles as needs change.]
- Car Sharing pools in large cities will keep growing in popularity with young people. [Smart Car, ZIP and Cars2Go]
- Fully insured, flat monthly fee or rate structures. [Luxury brands like BMW and Lexus]
- Short term rental or utilization agreement direct from OEMs. [Companies need this for employees in transition or relocation.]
- Development of the “Connected Car” with multimedia and Web-enabled services.[Mobility, Diagnostics, and Telematics are now a part of the funding arrangement.]
- Monitoring of business driver behavior to determine impact on fuel consumption and vehicle safety. [GPS Based Fueling Systems and Black boxes in cars.]
- Dealerships will be called “Transportation Management Centers” in the future with every possible service consumers want and need including finance, insurance, maintenance, and rentals, and technology support facilities.