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Automotive financial services in Germany Motor Finance Summit Europe Munich, 23rd April 2015
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Agenda
1. Overview: The German auto finance & leasing market
2. Relevance of captive financial services...
... to customers
... to dealers
... to the OEMs
3. Outlook: Future challenges for captive financial services
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1. Overview: The German auto finance & leasing market
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Finance and leasing in Germany § approx. 75 percent of all new cars in
Germany are financed or leased
§ Three competing groups in the market: § Captives (Car manufacters‘ banks)
(market share approx. 66 %)
§ Non-Captives (Consumer banks) (market share approx. 22 %)
§ Commercial banks / Savings banks (market share approx. 12 %)
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§ 11 captive institutions representing 31 car brands
Captive banks in Germany
§ Banque PSA Finance § BMW Group Financial Services § FCA Bank Germany § Ford Bank § Opel Bank § Honda Bank
§ Mercedes-Benz Bank § MKG Bank § RCI Banque § Toyota Financial Services § Volkswagen Financial
Services
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Captive banks as market leaders
§ Customers: 10 million
§ Market share: 66% (new cars) 50% (used cars)
§ Volume of contract portfolio: 95 billion EUR
§ Employees (all Germany-based): approx. 10.000
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Captives in the automotive value chain
supplier OEM dealer customer
Wholesale § Dealer financing § Investment and
equipment financing
Retail § Financing § Leasing § Insurances § Car related services
Re-Marketing § Used car financing § Distribution through
captives
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§ AKA is the umbrella organisation and joint platform of the captive financial services in Germany
Key functions: § Enhancement of the captives
profile in the public domain § Media communication § Monitoring of legislative initiatives § Political lobbying activities § Facilitation of expert
committees
AKA: Partnership for mobility
Arbeitskreis Autobanken (AKA)"
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2. Relevance of captive financial services...
a) ... to customers
b) ... to dealers c) ... to the OEMs
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2. Relevance of captive financial services...
a) ... to customers
b) ... to dealers c) ... to the OEMs
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§ Captive financial services have become an integral part of people‘s car purchase
Relevance to customers
Financial Services
Cash Buyers
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§ Simple and carefree mobility
§ Wide product range provided under one roof („One-stop-shopping“)
§ Tailor-made solutions matching the monthly budget
§ Product bundles cover all mobility costs and risks („Total cost of usage“)
Relevance to customers
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§ On average customers choose more than two additional services when leasing/financing with a captive
§ Most demanded car-related services:
Relevance to customers
Car insurance
Car maintenance
Warranty extension
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2. Relevance of captive financial services...
a) ... to customers
b) ... to dealers c) ... to the OEMs
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§ For dealers in Germany the captives are an indispensable success factor.
Three examples: § Financial service custumers generally choose
higher value cars.
§ They are more loyal and tend to stick with their dealer (higher retention rate).
§ Car dealers have a quicker vehicle turnover with financial service customers.
Relevance to dealers
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§ Captives have a positive influence on the customers‘ choice of car.
Relevance to dealers
Earlier car purchase
More comprehensive equipment
Bigger car model
Purchase of new car instead of used car
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§ Captives increase the customers‘ loyalty to their dealer significantly.
Relevance to dealers
Subsequent purchase with the same dealer
Recommending the dealer to others
Captives customers Customers of other banks
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§ Average time before purchasing the next car is shorter with customers of captive banks.
§ Leasing customers tend to keep their car even shorter.
§ Moreover, car dealers benefit to a great extent from the
additional services and insurances of the car banks („Aftersale“).
Relevance to dealers
Captives customers
Cash buyers
4,5 years
6,2 years
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2. Relevance of captive financial services...
a) ... to customers
b) ... to dealers c) ... to the OEMs
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§ Captives have a positive influence on the OEM‘s balance sheet.
Relevance to the OEMs
Total equity Total assets Revenues EBT
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§ Captives tend to deliver more stable EBT than the industrial part of the OEM’s business.
§ The OEM can profit from a continuous revenue stream, which enables it to stabilize its balance sheet even in turbulent conditions.
Relevance to the OEMs
billion EUR
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More captive assets at a glance: § Captives provide a more sustainable rating of the OEM.
§ They are experts on residual value risks.
§ Captives have direct contact with the customers.
§ Autobanks increase the customer‘s brand loyalty.
§ They win new customers for the OEM.
§ Captives are mobility service providers – an asset becoming more and more valuable for the OEM.
Relevance to the OEMs
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3. Outlook: Future challenges of captive financial services
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§ Change of customer requirements
§ Need for new business models
§ Captives have already started new mobility concepts
Outlook: New mobility concepts
From owning a car ...
• Cash buy • Leasing • Finance
... to using a car • Carsharing • Intermodal
mobility solutions • Short-term rent • Green fleets • Carpooling
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Captives are drivers for new mobility concepts...
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§ E-Mobility and alternative drive technologies create a new business segment for financial services
§ Which way will the industry take? § Purchase, leasing, finance ...? § Should the battery be included
in the monthly payment? § All-inclusive products with or
without electricity?
§ Relevance of automotive financial services will further increase
Outlook: Green Mobility
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§ Change of customer behaviour: People are „always on“! § 84% of people still regard classic car dealer as the main
source of information when purchasing a car § But: 97% of clients research for a new car online § And: 9% of new vehicles are already purchased online
§ New disrupting market players are a challenge to the
established retail system
§ Close interlinking of online and offline is key to success
§ Captives introduce new solutions to be the customers‘ first choice in the future, too
Outlook: Digitalization
Sources: DAT/Capgemini
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Outlook: Digitalization
Easy use of online calculators
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Outlook: Digitalization
Online Purchase and Leasing in cooperation with car dealers.
Examples: • Mercedes-
Benz Online Store
• Volkswagen Leasing Börse
The captives are well prepared for the future... Thank you!
