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Consumer Automotive Financial Services in the USA - Midwest Region investigates the market for automotive financial services linked to sales of new and used passenger cars to individual buyers in the Midwest region of the US. In addition to analysing the market for finance and leasing services, the study also covers vehicle service contracts (sometimes termed extended warranties), GAP protection, prepaid maintenance, tire and wheel protection (also known as road hazard protection), minor damage protection (also known as 'dent and ding' protection), road assistance, creditor insurance, excess wear and tear protection (for leased cars) and motor (auto) insurance.

As such, it provides a definitive overview of the market for consumer 'F&I' products in the Midwest region of the US, which includes the following states: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.

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 the Midwest region of the US is provided in terms of gross advances and assets leased for 2009 to 2013 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.s.

Moreover, also by means of data for average take-up rates, the markets for vehicle service contracts, GAP protection, prepaid maintenance, tire and wheel protection, minor damage protection, road assistance, creditor insurance and excess wear and tear protection are sized in terms of gross written premiums and other revenues sold through the automotive trade (i.e. via dealers and manufacturers) in 2013. These markets, estimated to be worth over USD 28.5 billion in total nationwide in 2013, are broken down between new and used cars, and between new contracts sold during 2013 and in-force business sold in previous years but still being renewed in 2013.

The report draws on a survey of 55 leading car dealerships in the Midwest region, including a number of specialist used car dealers, as well as an analysis of the national approach to consumer automotive financial services of 40 car manufacturer brands in the US. 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.

In addition to captive finance companies owned by manufacturer brands, organisations covered by the report include Allstate, Ally Financial, Arch Insurance Group, Bank of America, Capital One, Chase, CNA National Warranty, Cross Country Motor Club, JM Family Enterprises, Safe-Guard, Santander Consumer USA, The Warranty Group, Warrantech Automotive, Wells Fargo and Zurich. Together, the report and database will provide you with the definitive guide to current and future opportunities in consumer automotive financial services in the Midwest region of the US.

Table Of Contents

Consumer Automotive Financial Services in the USA - Midwest Region
Table of Contents

Executive Summary

Introduction

Market Analysis

List of Graphics / Tables



0.0 EXECUTIVE SUMMARY

1.0 INTRODUCTION

What is this report about?

The focus of the report is on financial services related to the sale of passenger cars to individuals...

... commonly referred to in the US as 'FandI' products

Rationale

The provision of financial services is essential to support both car sales and profitability

This report offers a detailed analysis of the subject in the Midwest based on primary research

Methodology

Survey of dealers and manufacturers

Market data

Computation of market data is based on a complex set of assumptions and variables…

…in order to provide market segmentations in unrivalled detail

External sources

Definitions

Finance and leasing products

Insurance, protection, warranty and assistance products

Operating models

Tied and non-tied providers

Abbreviations

PartnerBASE and market data annexe

Finaccord



2.0 MARKET ANALYSIS

Introduction

Passenger vehicle data

New car sales have recovered strongly since the low point recorded in 2009

GM was the leading manufacturer group in 2013, ahead of Ford and Toyota

Consumer automotive finance and leasing market

Market size and growth

Point-of-sale finance for new cars has recovered most rapidly since 2009...

... causing the total market value to rise at a compound annual growth rate more than 10% since then

Types of finance and leasing product

Leasing makes up nearly a fifth of point-of-sale finance contracts in the Midwest

Consumer automotive insurance, service contract and assistance markets

Market sizes

In total, the automotive trade is likely to have sold policies worth more than USD 5 billion in 2013...

...with more than 50% of these revenues coming from used car sales

Survey of automotive dealers and manufacturer brands - overview

Introduction

Provision of consumer automotive financial services

Four products are offered by more than 80% of dealers...

...though among specialist used car dealers, finance is the only product offered by more than 80%

Manufacturers lag behind dealers for the provision of minor damage protection

Number and nature of dealer schemes

On average, car dealers in the Midwest use more than 13 providers for finance and leasing...

...and an average of 1.74 for vehicle service contracts

Types of creditor insurance policy sold by dealers

Creditor insurance sometimes takes the form of cover for life and disability only

Types of motor insurance policy sold by dealers

All motor insurance policies sold through dealers cover liability and damage

Sources of road assistance distributed by dealers

Vehicle service contracts nearly always include road assistance

Consumer uptake of automotive financial services through dealers

Nearly three quarters of new car customers take out point-of-sale finance or leasing...

...and more than a fifth of these customers took out tire and wheel or minor damage protection

Survey of automotive dealers and manufacturer brands - partnerships

Introduction

Finance and leasing

Three non-tied competitors hold a third of dealer partnerships between them...

...while CarMax Auto Finance is likely to distribute about 10% of all used car point-of-sale finance

Other used car finance partners range from collector car specialists to sub-prime lenders

Six manufacturer brands utilise more than one official partner for finance and leasing

The top three providers are all captives...

...while the deal of Santander Consumer USA with Fiat Chrysler Automobiles transforms its potential

Ford Credit is the leading firm when combining dealer and manufacturer relationships

Vehicle service contracts

Nearly half of dealers that offer vehicle service contracts work with both tied and non-tied competitors...

...led by JM Family Enterprises and The Warranty Group

GM's partners are the leading external providers of vehicle service contracts through manufacturer brands...

...as 21 brands reportedly operate their own contracts

In a competitive environment, the leading vehicle service contract provider controls only 10% of this market

GAP protection

Over 20 non-tied competitors are named by dealers for GAP protection...

...led by JM Family Enterprises, Zurich and American Auto Guardian

A majority of manufacturer brands have introduced schemes for GAP protection...

...with Warrantech Automotive well-placed thanks to its partnership with Fiat Chrysler Automobiles

A combined analysis of GAP protection providers ranks JM Family Enterprises as the number one group

Prepaid maintenance

A majority of dealers offer prepaid maintenance plans run by their manufacturer brand...

... while three non-captive partners work directly with manufacturer brands

Tire and wheel protection

More than three quarters of dealers in the Midwest offer tire and wheel protection...

...and Safe-Guard is the leading partner for manufacturer brands

Minor damage protection

A dozen non-tied providers work with dealers for 'dent and ding' protection...

... with Safe-Guard the leading external partner for manufacturer brands once more

Road assistance

Non-tied road assistance providers are generally linked with vehicle service contracts

Cross Country Motor Club is the preferred assistance provider of a majority of manufacturer brands...

... in spite of competition from non-captive entities such as Road America and Signature Motor Club

Creditor insurance

Where offered, dealers source creditor insurance separately from finance providers...

...in part because only one manufacturer group offers creditor insurance

Excess wear and tear protection

Six non-tied partners are used for excess wear and tear protection by dealers in the Midwest...

...while three manufacturer groups work with external partners

Motor insurance

A very small percentage of dealers sell motor insurance themselves...

... though 40% of manufacturer brands offer it, selling online or by phone




LIST OF GRAPHICS / TABLES


TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY

Key market data for consumer automotive financial services in the Midwest, 2013

1.0 INTRODUCTION

2.0 MARKET ANALYSIS

Passenger car parc and new / used passenger car sales in the Midwest, 2009 to 2013

Passenger car parc and new / used passenger car sales in the Midwest, 2009 to 2013 (table)

New light vehicle registrations in the US, segmented by manufacturer group, 2013

New and used passenger car finance market in the Midwest segmented by distribution channel: volumes, 2009 to 2013

New and used passenger car finance market in the Midwest, segmented by distribution channel: values, 2009 to 2013

New and used passenger car finance market in the Midwest, segmented by distribution channel: values and volumes, 2009 to 2013 (data)

% split between the different types of finance and leasing contract organised at the point of sale in the Midwest, 2014

Total revenues from consumer automotive protection, service contract and assistance markets in the Midwest, 2013

Total revenues from consumer automotive protection, service contract and assistance markets in the Midwest, 2013 (table)

Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in the Midwest, 2014

Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in the Midwest, 2014 (table)

Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in the Midwest, 2014

Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in the Midwest, 2014 (table)

% split between the different types of creditor insurance policy sold at the point of sale in the Midwest, 2014

% split between the different types of motor insurance policy sold at the point of sale in the US, 2014

% availability of road assistance through factory warranties, vehicle service contracts, motor insurance, prepaid maintenance, as a stand-alone product and with annual servicing in the Midwest, 2014

% of new and used car purchasers acquiring each type of automotive financial service at the point of sale in the Midwest, 2014

Provision of finance and leasing by dealers in the Midwest, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of finance and leasing by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Implied market shares of new business for finance and leasing in the Midwest, 2014

Provision of vehicle service contracts by dealers in the Midwest, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of vehicle service contracts by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Implied market shares of new business for vehicle service contracts in the Midwest, 2014

Provision of GAP protection by dealers in the Midwest, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of GAP protection by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Implied market shares of new business for GAP protection in the Midwest, 2014

Provision of prepaid maintenance by dealers in the Midwest, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of prepaid maintenance by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of tire and wheel protection by dealers in the Midwest, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of tire and wheel protection by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of minor damage protection by dealers in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of minor damage protection by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of road assistance by dealers in the Midwest, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of road assistance by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of creditor insurance by dealers in the Midwest, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of creditor insurance by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of excess wear and tear protection by dealers in the Midwest, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of excess wear and tear protection by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of motor insurance by dealers in the Midwest, 2014: provision rate and product sources

Provision of motor insurance by manufacturer brands in the Midwest, 2014: provision rate, operating models and weighted provider share of partnerships

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