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Automotive Finance Industry – Highlights and Top Trends from Dr. Olaf Neitzsch
Dr. Neitzsch, for the start and in a “nutshell”, could you please give us a short general overview on the Automotive Finance Industry?
Yes, sure! Automotive Finance is on the one hand a global industry but at the same time has to adapt to legislation and business environments in specific local markets.
Main players in that industry are the Financial Services Divisions / “AFC” (1) of Global Automotive Groups / “OEM” (2) as well as “independent” universal banks / finance companies which could serve numerous OEM / brands / dealers in specific markets.
In general, the large Global OEMs have a very integrative approach with their AFC, and that concerns ownership, strategy and tactical actions. Here we could mention especially Toyota Motor Corporation, VW Group, Renault – Nissan Group and Ford Motor Company as well as the two premium groups Daimler and BMW – all of them covering their numerous Automotive Brands. General Motors is somewhat specific: although one of the “Top 3” OEM in car sales and having had their own AFC named “GMAC” for a long time – in the last few years they have changed ownership and strategy several times – so it remains to be seen how that plays out for them long-term. Also, Hyundai – Kia Group has only entered a few markets so far with its own AFC; in many others they work with external providers, so there is still some potential to be captured. Usually, all these AFC go into “larger” (3) markets and support their OEM there.
In “smaller” Automotive Markets, those AFC which focus on the brands of their own OEM could find it challenging to achieve the necessary scale for a Business Case. So, especially in smaller markets, local Universal Banks / Finance Companies often cover Automotive Finance and work directly with OEM and / or the car dealers.
It is important to note that “Automotive Finance” means not only Retail Finance but also includes Corporate / Dealer Finance as well as related services such as Leasing, Fleet Finance and Insurance “packaged” with Finance products.
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