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Consumer Automotive Financial Services in Finland

  • September 2013
  • -
  • Finaccord
  • -
  • 57 pages

Consumer Automotive Financial Services in Finland investigates the market for automotive financial services linked to sales of new and used passenger cars to individual buyers in Finland. In addition to analysing the market for finance and leasing services, the study also covers creditor insurance, motor insurance, road assistance, extended warranties, prepaid service contracts and GAP insurance.

Using survey results for average take-up rates for finance and leasing propositions at the point of sale, data for the size and growth of the automotive finance and leasing market for consumers in Finland is provided in terms of gross advances and assets leased for 2008 to 2012 with splits between finance for new and used cars and between finance organised through dealerships at the point of sale and directly with banks or other lending institutions.

Moreover, also by means of data for average take-up rates, the markets for road assistance, extended warranties and prepaid service contracts are sized in terms of gross written premiums and other revenues sold through the automotive trade (i.e. via dealers and manufacturers) in 2012. These markets, estimated to be worth EUR 91.1 million in total in 2012, are broken down between new and used cars, and between new contracts sold during 2012 and in-force business sold in previous years but still being renewed in 2012.

The report draws on a survey of 35 leading car dealerships as well as an analysis of the approach to consumer automotive financial services of 32 car manufacturer brands in Finland. The PartnerBASE™ dataset that accompanies the report details each of the marketing initiatives for consumer automotive financial services traced by Finaccord for both dealers and manufacturers; a market data annexe is also available in a convenient spreadsheet format so that there is no need to re-enter key data points from the report.

In addition to captive finance companies owned by manufacturer brands, organisations covered by the report include ALD Automotive, Autoliitto, Blue White Warranty, Falck, Forso Finance, Fragus Warranty Finland, Genworth Financial, Nordea, Santander Consumer Finance and Suomen Takuuvakuutus. Together, the report and database will provide you with the definitive guide to current and future opportunities in consumer automotive financial services in Finland.

Table Of Contents

Consumer Automotive Financial Services in Finland
TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY 1

1.0 INTRODUCTION 3

What is this report about? 3
The focus of the report is on financial services related to the sale of passenger cars to individuals 3
Rationale 3
The provision of financial services is essential to support both car sales and profitability 3
This report offers a detailed updated analysis of the subject in Finland based on primary research 3
Methodology 3
Survey of dealers and manufacturers 3
Market data 4
Computation of market data is based on a complex set of assumptions and variables… 4
…in order to provide market segmentations in unrivalled detail 5
External sources 6
Definitions 6
Finance and leasing products 6
Insurance, warranty and assistance products 7
Operating models 8
Tied and non-tied providers 8
Abbreviations 8
PartnerBASE and market data annexe 8
Finaccord 9

2.0 MARKET ANALYSIS 11

Introduction 11
Passenger vehicle data 12
New car sales in 2012 slipped back after the partial recovery of 2010 and 2011 12
Hyundai and Renault Nissan groups have increased their market share most substantially in recent years 13
Consumer automotive finance and leasing market 14
Market size and growth 14
There has been a slight drop in point-of-sale finance with new cars and an increase with used ones 14
resulting in a slight decline in the total market by value between 2008 and 2012 15
Types of finance and leasing product 17
Leasing contracts make up nearly 20% of all point-of-sale contracts 17
Consumer automotive insurance, warranty and assistance markets 18
Market sizes 18
In total, the automotive trade is likely to have sold policies worth about EUR 90 million in 2012 18
Survey of automotive dealers and manufacturer brands - overview 21
Introduction 21
Provision of consumer automotive financial services 22
Provision rates for extended warranties and prepaid service contracts have increased since 2010 22
but dealers' interest in selling creditor insurance has declined 22
Number and nature of dealer schemes 24
Finnish dealers work with an average of more than five finance providers each 24
which represents a substantial rise since 2010 24
Sources of road assistance distributed by dealers 27
Road assistance is always embedded within motor insurance 27
Consumer uptake of automotive financial services through dealers 28
Take-up rates for point-of-sale finance have dipped among new car buyers but risen with used cars 28
while prepaid service contracts are equally popular among both types of car buyer 28
Survey of automotive dealers and manufacturer brands - partnerships 30
Introduction 30
Finance and leasing 31
Around a dozen non-tied competitors provide finance and leasing contracts to the dealer channel 31
Among manufacturer brands, Forso Finance is the leading provider by weighted share of partnerships 33
closely followed by Santander Consumer Finance 33
Across all types of provider, the leading firm has an implied market share of new business of 21.3% 35
Creditor insurance 36
Just one creditor insurance provider works directly with manufacturer brands 36
Motor insurance 37
LähiTapiola and Pohjantähti both have partnerships with major chains 37
while three motor insurers hold partnerships with manufacturer brands, led by If Vahinkovakuutusyhtiö 39
Extended warranties 41
Dealers work with non-tied providers most of the time, led by Suomen Takuuvakuutus 41
as only four manufacturer brands run their own extended warranty scheme 43
A combined analysis assigns an implied 42.0% market share to the leading competitor 45
Road assistance 46
Some dealers have road assistance partnerships for used cars that fall outside manufacturers' schemes 46
Autoliitto and Falck divide manufacturer brand mandates between them 47
Prepaid service contracts 49
Other than manufacturers' schemes, dealers use their own service contracts or those of leasing companies 49
Half of all manufacturer brands offer prepaid service contracts 51



LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1

Key market data for consumer automotive financial services in Finland, 2012 2

1.0 INTRODUCTION 3

2.0 MARKET ANALYSIS 11

Passenger car parc and new / used passenger car sales in Finland, 2008 to 2012 12
Passenger car parc and new / used passenger car sales in Finland, 2008 to 2012 (data) 13
New car registrations in Finland, segmented by manufacturer group, 2012 13
New and used passenger car finance market in Finland, segmented by distribution channel: volumes, 2008 to 2012 14
New and used passenger car finance market in Finland, segmented by distribution channel: values, 2008 to 2012 15
New and used passenger car finance market in Finland, segmented by distribution channel: values and volumes, 2008 to 2012 (data) 16
% split between the different types of finance and leasing contract organised at the point of sale in Finland, 2013 17
Total revenues from consumer automotive insurance, warranty, assistance and service contract markets in Finland, 2012 19
Total revenues from consumer automotive insurance, warranty, assistance and service contract markets in Finland, 2012 (data) 20
Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in Finland, 2013 23
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Finland, 2013 25
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Finland, 2013 (data) 26
% availability of road assistance through factory warranties, extended warranties, motor insurance, prepaid service contracts and as a stand-alone product in Finland, 2013 27
% of new and used car purchasers acquiring each type of automotive financial service at the point of sale in Finland, 2013 29
Provision of finance and leasing by dealers in Finland, 2013: provision rate, product sources and provider share of non-tied partnerships 32
Provision of finance and leasing by manufacturer brands in Finland, 2013: provision rate, operating models and weighted provider share of partnerships 34
Implied market shares of new business for finance and leasing in Finland, 2013 35
Provision of creditor insurance by manufacturer brands in Finland, 2013: provision rate and operating models 36
Provision of motor insurance by dealers in Finland, 2013: provision rate, product sources and provider share of non-tied partnerships 38
Provision of motor insurance by manufacturer brands in Finland, 2013: provision rate, operating models and weighted provider share of partnerships 40
Provision of extended warranties by dealers in Finland, 2013: provision rate, product sources and provider share of non-tied partnerships 42
Provision of extended warranties by manufacturer brands in Finland, 2013: provision rate, operating models and weighted provider share of partnerships 44
Implied market shares of new business for extended warranties in Finland, 2013 45
Provision of road assistance by dealers in Finland, 2013: provision rate and product sources 46
Provision of road assistance by manufacturer brands in Finland, 2013: provision rate, operating models and weighted provider share of partnerships 48
Provision of prepaid service contracts by dealers in Finland, 2013: provision rate, product sources and provider share of non-tied partnerships 50
Provision of prepaid service contracts by manufacturer brands in Finland, 2013: provision rate, operating models and weighted provider share of partnerships 52

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