F&I and Showroom, May 2018

www fi magazine com 22 F I and Showroom May 2018 AUTO FINANCE change Commission Meanwhile used car prices declined approximately 5 in 2017 vs 2016 GM Financial said We expect similar performance in 2018 with car prices expected to decline an additional 5 to 6 in 2019 Berce said in February when GM Financial reported its fourth quarter and year end results In response parent company General Motors is tapping the brakes on leasing by steering incentives into subvented loans In 2017 GM Financial originated 678000 leases up just 09 from 2016 In 2016 its lease originations were up 222 from the year prior STEPPING ON THE GAS For different reasons Santander Consumer USA has been on the gas in leasing The company rededicated itself last year to capturing more business with Fiat Chrysler Automobiles FCA dealers and the automaker has pushed leasing in response to dealer demand and to protect market share With interest rates increasing this year Santander Consumer like other finance sources expects incentives to shift toward subvented loans the company said during its fourth quarter investor call in January Rich Morrin president of Chrysler Capital and auto relationships for Santander joined the AFSA panel several months after being promoted from COO Santander and FCA launched Chrysler Capital in 2013 and Santander continues to provide retail loans leases dealer floorplan and commercial loans for Fiat Chrysler dealers in that name In 2017 Santanders total auto originations were 202 billion down 8 from 2016 Total Chrysler Capital retail loans were down 16 to 67 billion However lease originations were up 16 to 6 billion In the fourth quarter lease originations increased 34 from the year prior to 13 billion In the second quarter of last year Santander also completed the national rollout of its Chrysler Capital VIP program of dealer incentives with more than 2500 dealerships participating In answer to a question during the AFSA panel Morrin said Santander is working hard on its FCA dealer relationships We try and foster a relationship with every single Chrysler dealer he said We dont just take it for granted COMMERCIAL USERS Another hot topic on the AFSA CEO panel was how to handle loan applicants who are likely to use their vehicles for ride hailing services such as Uber and Lyft Even though retail installment sales contracts for individual buyers typically mandate the customer not use the vehicle for commercial use and even though an Uber driver probably puts extra wear and tear on a vehicle a couple of panelists said that in effect they would probably OK such applications Quite frankly were not going to stop it said Rich Hyde COO for Prestige Financial Services Inc a subprime specialist based in Salt Lake City He added Subprime customers tend to put on a lot of miles anyway GM Financials Berce said GM Financial probably doesnt care one way or the other as long as theyre paying for the vehicle and wear and tear are in the right spot He pointed out that parent GM owns Maven an on demand mobility platform launched in 2016 In March 2017 GM Financial entered an agreement to purchase program vehicles and lease them to Maven for use in their U S ridesharing arrangements according to GM Financials annual report LOYALTY MATTERS Finally panelists agreed that as newvehicle sales decline customer loyalty is more important than ever and the focus in loyalty is on improving the customer experience especially online Ravi Raghu president of Capital One Auto Finance Inc acknowledged that auto finance lags many other industries in terms of customer experience He said How many here as a car shopper and going through the financing experience can say they looked back and said Wow that was amazing Morrin of Santander Consumer said catering to millennials probably has a positive effect on all customers The way a millennial wants to transact you want the process to be transparent and easy he said We need to build processes that are just that Hyde of Prestige Financial said ease of use and wanting to make the customer experience better are company goals for 2018 Businesses that do well today are either easy or fun he said Were not much fun right now but we can be easy It sounds contrary but Hyde pointed out that as a subprime lender Prestige Financial considers it a success if customers graduate to prime credit and dont come back He said Were not really looking for repeat customers necessarily ABOUT THE AUTHOR Jim Henry is a freelance writer based in the greater New York City area Contact him at jim henry@ bobit com The audience stays engaged at the American Financial Services Association AFSA s annual Vehicle Finance Conference Expo last month in Las Vegas The never preceded the National Automobile Dealers Associations annual convention