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Consumer Automotive Financial Services in Luxembourg

  • October 2013
  • -
  • Finaccord
  • -
  • 59 pages

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

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 Luxembourg 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 creditor insurance, motor insurance, road assistance, extended warranties, GAP insurance 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 21.4 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 34 car manufacturer brands in Luxembourg. 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 AlphaCredit, Automobile Club du Luxembourg, Autosdiffusion M. Losch Service Leasing, Banque Internationale à Luxembourg, BGL BNP Paribas, Buy Way Personal Finance, CarGarantie, IMA Benelux, La Luxembourgeoise and Record Bank. Together, the report and database will provide you with the definitive guide to current and future opportunities in consumer automotive financial services in Luxembourg.

Table Of Contents

Consumer Automotive Financial Services in Luxembourg
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 ground-breaking analysis of the subject in Luxembourg 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 7
Tied and non-tied providers 8
Abbreviations 8
PartnerBASE and market data annexe 8
Finaccord 9

2.0 MARKET ANALYSIS 10

Introduction 10
Passenger vehicle data 11
There was a fall in the volume of sales of both new and used cars between 2008 and 2012 11
German and French manufacturer groups share over 70% of new car registrations between them 12
Consumer automotive finance and leasing market 13
Market size and growth 13
The volume of cars financed fell in 2012 as a result of the sharp decline in used car sales 13
although the contraction was less pronounced when measured by value 14
Types of finance and leasing product 16
Nearly three quarters of private car finance takes the form of simple loans with no option to return the car 16
Consumer automotive insurance, warranty and assistance markets 17
Market sizes 17
In total, the automotive trade is likely to have sold policies worth over EUR 20 million in 2012 17
Survey of automotive dealers and manufacturer brands - overview 20
Introduction 20
Provision of consumer automotive financial services 21
Finance and leasing, extended warranties and road assistance are the core services offered by dealers 21
with interest in selling motor insurance limited by local regulations 21
Number and nature of dealer schemes 23
On average, dealers are slightly more likely to used tied partners for finance and leasing 23
Types of creditor insurance policy sold by dealers 26
The majority of dealers offer creditor insurance policies giving comprehensive protection 26
Types of motor insurance policy sold by dealers 27
Not all dealers selling motor insurance policies offer comprehensive cover 27
Sources of road assistance distributed by dealers 28
Road assistance is sometimes available from sources other than manufacturers' factory warranties 28
Consumer uptake of automotive financial services through dealers 29
Take-up rates for point-of-sale finance are very similar for new and used car sales 29
but car buyers from outside Luxembourg cannot take out certain automotive financial services 29
Survey of automotive dealers and manufacturer brands - partnerships 31
Introduction 31
Finance and leasing 32
AlphaCredit claims the largest share of partnerships as a non-tied provider 32
in a sector in which seven non-tied competitors are visible in total 32
The same company is also the leading non-captive partner for manufacturer brands 34
although captive providers account for 70% of the weighted share of partnerships 34
Across all types of provider, the leading firm has an implied market share of new business of 31.0% 36
Creditor insurance 37
Only two providers enjoy direct ties with manufacturer brands 37
Motor insurance 39
Comparatively few dealers intermediate motor insurance 39
La Luxembourgeoise is the leading partner among manufacturer brands 39
Extended warranties 41
CarGarantie is the external non-tied provider that is most frequently used among dealers 41
while Allianz takes the lead among manufacturers' partners thanks to its relationship with the VW group 43
A combined analysis assigns an implied 24.6% market share to the leading competitor 45
Road assistance 46
Tied schemes dominate the provision of road assistance 46
Automobile Club du Luxembourg is the dominant local assistance provider 47
although not all manufacturer brands use it for their own assistance programs 47
GAP insurance 49
A small proportion of dealers offer finance GAP policies 49
with penetration also limited among manufacturer brands 50
Prepaid service contracts 51
Arval and Axus offer prepaid service contracts through dealers 51
albeit the majority of manufacturer brands have configured their own products in this sphere 53



LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1

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

1.0 INTRODUCTION 3

2.0 MARKET ANALYSIS 10

Passenger car parc and new / used passenger car sales in Luxembourg, 2008 to 2012 11
Passenger car parc and new / used passenger car sales in Luxembourg, 2008 to 2012 (data) 12
New car registrations in Luxembourg, segmented by manufacturer group, 2012 12
New and used passenger car finance market in Luxembourg, segmented by distribution channel: volumes, 2008 to 2012 13
New and used passenger car finance market in Luxembourg, segmented by distribution channel: values, 2008 to 2012 14
New and used passenger car finance market in Luxembourg, segmented by distribution channel: values and volumes, 2008 to 2012 (data) 15
% split between the different types of finance and leasing contract organised at the point of sale in Luxembourg, 2012 16
Total revenues from consumer automotive insurance, warranty, assistance and service contract markets in Luxembourg, 2012 18
Total revenues from consumer automotive insurance, warranty, assistance and service contract markets in Luxembourg, 2012 (data) 19
Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in Luxembourg, 2013 22
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Luxembourg, 2013 24
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Luxembourg, 2013 (data) 25
% split between the different types of creditor insurance policy sold at the point of sale in Luxembourg, 2013 26
% split between the different types of motor insurance policy sold at the point of sale in Luxembourg, 2013 27
% availability of road assistance through factory warranties, extended warranties, motor insurance, prepaid service contracts and as a stand-alone product in Luxembourg, 2013 28
% of new and used car purchasers acquiring each type of automotive financial service at the point of sale in Luxembourg, 2013 30
Provision of finance and leasing by dealers in Luxembourg, 2013: provision rate, product sources and provider share of non-tied partnerships 33
Provision of finance and leasing by manufacturer brands in Luxembourg, 2013: provision rate, operating models and weighted provider share of partnerships 35
Implied market shares of new business for finance and leasing in Luxembourg, 2013 36
Provision of creditor insurance by manufacturer brands in Luxembourg, 2013: provision rate, operating models and weighted provider share of partnerships 38
Provision of motor insurance by dealers in Luxembourg, 2013: provision rate and product sources 39
Provision of motor insurance by manufacturer brands in Luxembourg, 2013: provision rate, operating models and weighted provider share of partnerships 40
Provision of extended warranties by dealers in Luxembourg, 2013: provision rate, product sources and provider share of non-tied partnerships 42
Provision of extended warranties by manufacturer brands in Luxembourg, 2013: provision rate, operating models and weighted provider share of partnerships 44
Implied market shares of new business for extended warranties in Luxembourg, 2013 45
Provision of road assistance by dealers in Luxembourg, 2013: provision rate and product sources 46 Provision of road assistance by manufacturer brands in Luxembourg, 2013: provision rate, operating models and weighted provider share of partnerships 48
Provision of GAP insurance by dealers in Luxembourg, 2013: provision rate and operating models 49
Provision of GAP insurance by manufacturer brands in Luxembourg, 2013: provision rate and operating models 50
Provision of prepaid service contracts by dealers in Luxembourg, 2013: provision rate, operating models and provider share of non-tied partnerships 52
Provision of prepaid service contracts by manufacturer brands in Luxembourg, 2013: provision rate, operating models and weighted provider share of partnerships 54

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