Automotive financial services in Germany Motor Finance Summit Europe Munich, 23rd April 2015
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 2
3 1. Overview: The German auto finance & leasing market
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 %) 4
Captive banks in Germany 11 captive institutions representing 31 car brands 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 5
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 6
Captives in the automotive value chain supplier OEM dealer customer 7 Wholesale Dealer financing Investment and equipment financing Retail Financing Leasing Insurances Car related services Re-Marketing Used car financing Distribution through captives
AKA: Partnership for mobility 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 Arbeitskreis Autobanken (AKA)" 8
2. Relevance of captive financial services... a)... to customers b)... to dealers c)... to the OEMs 9
2. Relevance of captive financial services... a)... to customers b)... to dealers c)... to the OEMs 10
Relevance to customers Captive financial services have become an integral part of people s car purchase Financial Services Cash Buyers 11
Relevance to customers 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 ) 12
Relevance to customers On average customers choose more than two additional services when leasing/financing with a captive Most demanded car-related services: Car insurance Car maintenance Warranty extension 13
2. Relevance of captive financial services... a)... to customers b)... to dealers c)... to the OEMs 14
Relevance to dealers 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. 15
Relevance to dealers Captives have a positive influence on the customers choice of car. Earlier car purchase More comprehensive equipment Bigger car model Purchase of new car instead of used car 16
Relevance to dealers Captives increase the customers loyalty to their dealer significantly. Subsequent purchase with the same dealer Recommending the dealer to others Captives customers Customers of other banks 17
Relevance to dealers Average time before purchasing the next car is shorter with customers of captive banks. Captives customers Cash buyers 4,5 years 6,2 years 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 ). 18
2. Relevance of captive financial services... a)... to customers b)... to dealers c)... to the OEMs 19
Relevance to the OEMs Captives have a positive influence on the OEM s balance sheet. Total assets Revenues Total equity EBT 20
Relevance to the OEMs 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. billion EUR 21
Relevance to the OEMs 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. 22 Captives are mobility service providers an asset becoming more and more valuable for the OEM.
23 3. Outlook: Future challenges of captive financial services
Outlook: New mobility concepts Change of customer requirements Need for new business models Captives have already started new mobility concepts From owning a car...... to using a car 24 Cash buy Leasing Finance Carsharing Intermodal mobility solutions Short-term rent Green fleets Carpooling
Captives are drivers for new mobility concepts... 25
Outlook: Green Mobility 26 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: Digitalization 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 27 Sources: DAT/Capgemini
Outlook: Digitalization Easy use of online calculators 28
Outlook: Digitalization Online Purchase and Leasing in cooperation with car dealers. 29 Examples: Mercedes- Benz Online Store Volkswagen Leasing Börse
The captives are well prepared for the future... Thank you!