Current auto purchase ecosystem across major global markets is confusing for the customer and challenging for financial institutions
There have been conflicting signs in the recent past around the projected pace of growth in auto lending. Auto experts are now coming to a view that while new car sales will grow significantly (i.e. to 125 million by 2025), the car usage and ownership patterns might change. Overall, the projected trends augurs well for financial institutions that are into automotive lending.
Today, an average car purchase journey for a customer lasts around 25 days and invariably begins via an established digital channel, wherein customers research and compare shortlisted cars, apart from verifying their availability and pricing. Some of the key problems that they face include:
Traditionally most customers seek guidance on automotive finance while or post shortlisting prospective vehicles, which is a low down in the customer’s purchase cycle. Hence the challenges for financial institutions (FIs) into auto lending are also significant and are as following:
Closely look at the issues that the dealer partners of financial institution’s (FIs) face.
The above clearly indicates that dealers would need to aim for higher profitability by acquiring customers more seamlessly and cost effectively.
Implications for the industry
Over the years, consumers have come to realize the advantages of leveraging extensive digital research (i.e. currently at an average of 18-20 hours) before setting foot into a dealership. One would have interpreted the trend to result in an improvement of the overall customer satisfaction levels, however the reality is far from that. Significant emotional low points still exist for customers across the car purchase cycle including the clutter while researching for the car and the confusion once they decide to step into the car dealership. While customers clearly see the importance of car dealerships, their expectation are in the form of a more personalized approach that helps them meet their needs more seamlessly. Sensing an opportunity, many dealerships have now started financing on their own, peer to peer lenders have aggressively started targeting this segment, car sharing companies are providing alternates to owning and innovative B2C fintech models have sprung up to enable seamless financing. Hence the relevancy of traditional FIs in this financial product category is presently being threatened.
The future of automotive financing is bright for entities that become a car purchase guide for the customer
We at vLendRight believe that financial institutions (FIs) are the most qualified to offer a seamless “customer journey platform”, one that enables partnerships and offers an end-to-end connected car buying experience to the end customer. This platform can help FIs
The above can be a starting point for financial institutions to re-imagine the customer’s auto purchase journey by making themselves as the guide rails of the value ecosystem.
vLendRight as a platform will help banks gain market share in auto finance and also reinforce their brand of “customer first banking”. The solution will help partner dealers with a robust sales enablement and forecasting platform to drive both the volume and speed of inventory turnover.