Extensive financial services lead to more new car sales and higher revenues for OEMs
The number of cars being sold worldwide is constantly rising. But whereas the Chinese market grew by an average of 54 percent per annum between 2010 and 2014, sales in Europe have been stagnating. And European automakers (OEMs) anticipate only moderate growth in the period through 2020. Cars are increasingly being financed through loans and leasing offered not only by traditional banks but to a growing extent by OEM-owned captive banks too. In their latest study, "New captive finance – optimizing the customer lifetime value", the experts from Roland Berger identified four strategic steps that banks in the automotive sector can take to build their business with financial services into an additional revenue driver.
"In Germany, 45 percent of auto financing is already being provided by captive banks," said Philipp Grosse Kleimann, Partner at Roland Berger. The figure in other European countries like the UK, Italy, Spain and France is between just 34 and 37 percent. One of the reasons for this lies in the broader portfolio offered by German captive banks. "From the OEMs' perspective it makes sense to have a broad product offering partly because it enables them to generate customer data that would not normally be seen by anyone but the financing banks," explained Grosse Kleimann.