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Consumer Automotive Financial Services in Russia

  • August 2016
  • -
  • Finaccord
  • -
  • 58 pages

Consumer Automotive Financial Services in Russia investigates the market for automotive financial services linked to sales of new and used passenger cars to individual buyers in Russia. 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, GAP insurance and driver accident 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 Russia is provided in terms of gross advances and assets leased for 2011 to 2015 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 creditor insurance, motor insurance, road assistance, extended warranties, prepaid service contracts, GAP insurance and driver accident insurance are sized in terms of gross written premiums and other revenues sold through the automotive trade (i.e. via dealers and manufacturers) in 2015. These markets, estimated to be worth RUB 98.6 billion (about EUR 1.45 billion) in total in 2015, are broken down between new and used cars, and between new contracts sold during 2015 and in-force business sold in previous years but still being renewed in 2015.

The report draws on a survey of 70 leading car dealerships as well as an analysis of the approach to consumer automotive financial services of 49 car manufacturer brands in Russia. 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 Cetelem, Ingosstrakh, MetLife, RAF, RAMC, RESO-Guarantee, Ring, RN Bank, Rosgosstrakh, Rusfinance Bank, VSK and VTB24. Together, the report and database will provide you with the definitive guide to current and future opportunities in consumer automotive financial services in Russia.

Table Of Contents

Consumer Automotive Financial Services in Russia
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 Russia based on primary research 3
Methodology . 3
Survey of dealers and manufacturers 3
Market data . 5
Computation of market data is based on a complex set of assumptions and variables… . 5
…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
Exchange rate . 9
PartnerBASE and market data annexe 9
Finaccord 9
2.0 MARKET ANALYSIS . 11
Introduction . 11
Passenger vehicle data . 12
Sales of new and used cars both fell precipitously in 2015… 12
… as a consequence of Russia's ailing economy 12
Hyundai group has overtaken AvtoVAZ to become the market leader by new passenger car registrations . 13
Consumer automotive finance and leasing market 14
Market size and growth 14
Volumes financed both at the point of sale and directly have contracted sharply… . 14
… which has inevitably caused a steep fall in the market value 15
Types of finance and leasing product 17
Point-of-sale finance in Russia is dominated by relatively straightforward lending products 17
Consumer automotive insurance, warranty and assistance markets . 18
Market sizes 18
In total, the automotive trade is likely to have sold policies worth almost RUB 100 billion in 2015 18
Survey of automotive dealers and manufacturer brands - overview 21
Introduction 21
Provision of consumer automotive financial services . 21
Russian car dealers are increasingly likely to promote extended warranties and GAP insurance…. 21
. but manufacturer brands lag behind them in several cases 21
Number and nature of dealer schemes . 23
Russian dealers continue to work with multiple providers for most automotive financial services… . 23
… most notably finance and leasing plus motor insurance . 23
Types of creditor insurance policy sold by dealers . 25
In the majority of cases, dealers report availability of comprehensive creditor insurance policies . 25
Types of motor insurance policy sold by dealers 26
Nearly all motor insurance policies sold through dealers include both liability and other types of cover . 26
Sources of road assistance distributed by dealers . 27
Russian car buyers can acquire road assistance via the automotive trade in many different ways 27
Consumer uptake of automotive financial services through dealers . 28
Take-up rates for point-of-sale finance in Russia have decreased substantially in recent years… . 28
. but they have risen for most other automotive financial services… . 28
… as a consequence of two main factors . 28
Survey of automotive dealers and manufacturer brands - partnerships . 30
Introduction 30
Finance and leasing 31
In total, over 30 non-tied providers are active in a fragmented point-of-sale market. . 31
. with the leading competitor limited to a share of non-tied partnerships of just 16% 31
At least five captive finance providers are now active in the Russian market. 33
. although most manufacturer brands continue to employ multiple partners . 33
Cetelem (which in Russia is majority-owned by Sberbank) is the probable market leader 35
Creditor insurance . 36
Creditor insurance is available from most manufacturer brands . 36
Motor insurance 38
RESO-Guarantee is used most commonly by dealers as a non-tied provider. 38
. while Ingosstrakh and VSK feature most regularly as the preferred underwriters of manufacturer brands . 40
In the combined analysis, the leading provider holds an implied share of 20% of new business 42
Extended warranties . 43
Ingosstrakh is the leading non-tied extended warranty provider 43
. supplementing 15 manufacturer brands that have internally-managed warranty schemes . 45
A combined analysis attributes nearly a quarter of the market to the leading competitor . 47
Road assistance . 48
Most dealers intermediate road assistance by one means or another 48
RAF and Ring are the most prominent providers of stand-alone cover. . 48
… and the former company also holds numerous manufacturer brand partnerships…. 50
… putting it ahead of its three main competitors 50
GAP insurance 52
A clear majority of Russian dealers are now acting as distributors of GAP insurance… 52
. sourcing cover both directly from insurers and via finance providers 52
Enthusiasm for GAP insurance among manufacturer brands is much less apparent 54
Prepaid service contracts . 55
A minority of dealers cross-sell prepaid service contracts… 55
… sometimes using manufacturer propositions for this purpose . 55
Driver accident insurance . 57
Rosgosstrakh is used most frequently by dealers for driver accident insurance 57

LIST OF GRAPHICS / TABLES
0.0 EXECUTIVE SUMMARY . 1
Key market data for consumer automotive financial services in Russia, 2015 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS . 11
Passenger car parc and new / used passenger car sales in Russia, 2011 to 2015 12
Passenger car parc and new / used passenger car sales in Russia, 2011 to 2015 (table) . 13
New passenger car registrations in Russia, segmented by manufacturer group, 2015 13
New and used passenger car finance market in Russia, segmented by distribution channel: volumes, 2011 to 2015 . 14
New and used passenger car finance market in Russia, segmented by distribution channel: values, 2011 to 2015 15
New and used passenger car finance market in Russia, segmented by distribution channel: values and volumes, 2011 to 2015 (table) . 16
% split between the different types of finance and leasing contract organised at the point of sale in Russia, 2015 17
Total revenues from consumer automotive insurance, warranty, assistance and service contract markets in Russia, 2015 . 19
Total revenues from consumer automotive insurance, warranty assistance and service contracts in Russia, 2015 (table) . 20
Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in Russia, 2016 22
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Russia, 2016 (table) 23
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Russia, 2016 24
% split between the different types of creditor insurance policy sold at the point of sale in Russia, 2016 25
% split between the different types of motor insurance policy sold at the point of sale in Russia, 2016 . 26
% availability of road assistance through factory warranties, annual servicing, extended warranties, motor insurance, prepaid service contracts and as a stand-alone product in Russia, 2016 27
% of new and used car purchasers acquiring each type of automotive financial service at the point of sale in Russia, 2016 . 29
Provision of finance and leasing by dealers in Russia, 2015: provision rate, product sources and provider share of non-tied partnerships . 32
Provision of finance and leasing by manufacturer brands in Russia, 2015: provision rate, operating models and weighted provider share of partnerships 34
Implied market shares of new business for finance and leasing in Russia, 2015 35
Provision of creditor insurance by manufacturer brands in Russia, 2015: provision rate, operating models and weighted provider share of partnerships . 37
Provision of motor insurance by dealers in Russia, 2015: provision rate, product sources and provider share of non-tied partnerships . 39
Provision of motor insurance by manufacturer brands in Russia, 2015: provision rate, operating models and weighted provider share of partnerships . 41
Implied market shares of new business for manufacturer-branded and dealer-intermediated motor insurance in Russia, 2015 . 42
Provision of extended warranties by dealers in Russia, 2015: provision rate, product sources and provider share of non-tied partnerships . 44
Provision of extended warranties by manufacturer brands in Russia, 2015: provision rate, operating models and weighted provider share of partnerships 46
Implied market shares of new business for extended warranties in Russia, 2015 . 47
Provision of road assistance by dealers in Russia, 2015: provision rate, product sources and provider share of non-tied partnerships . 49
Provision of road assistance by manufacturer brands in Russia, 2015: provision rate, operating models and weighted provider share of partnerships . 51
Provision of GAP insurance by dealers in Russia, 2015: provision rate, product sources and provider share of non-tied partnerships . 53
Provision of GAP insurance by manufacturer brands in Russia, 2015: provision rate and operating models . 54
Provision of prepaid service contracts by dealers in Russia, 2015: provision rate and product sources 55
Provision of prepaid service contracts by manufacturer brands in Russia, 2015: provision rate, operating models and weighted provider share of partnerships 56
Provision of driver accident insurance by dealers in Russia, 2015: provision rate, product sources and provider share of non-tied partnerships 58

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