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Consumer Automotive Financial Services in the USA - Southern Region investigates the market for automotive financial services linked to sales of new and used passenger cars to individual buyers in the Southern 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 Southern region of the US which includes the following states: Alabama, Arkansas, Delaware, District of Colombia., Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia.

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 Southern 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.

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 85 leading car dealerships in the Southern 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 Southern region of the US.

Table Of Contents

Consumer Automotive Financial Services in the USA - Southern 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 Southern region 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

In keeping with the rest of the US, sales of both new and used cars have grown strongly in recent times

The top ten manufacturer groups hold nearly 95% of the market for new vehicles

Consumer automotive finance and leasing market

Market size and growth

More than 13 million used cars were bought with finance or leasing in the Southern region in 2013...

...and by value, all segments of the market grew by more than 10% a year between 2009 and 2013

Types of finance and leasing product

One finance product type accounts for almost 90% of all point-of-sale contracts in the South

Consumer automotive insurance, service contract and assistance markets

Market sizes

Service contracts, protection, insurance and assistance policies are worth more than USD 12 billion...

...with the used car market greater than the new car market for four of these products

Survey of automotive dealers and manufacturer brands - overview

Introduction

Provision of consumer automotive financial services

Creditor and motor insurance score the lowest provision rates among dealers in the South

Specialist used car dealers do not offer leases

Dealers are somewhat more likely to offer minor damage protection than manufacturers

Number and nature of dealer schemes

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

...but fewer than two providers for all other products apart from road assistance

Types of creditor insurance policy sold by dealers

Where offered, most dealers sell comprehensive creditor insurance policies

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

Road assistance is usually provided automatically or packaged with other products

Consumer uptake of automotive financial services through dealers

Attachment rates for GAP protection are very similar to those for vehicle service contracts

...and more than 15% of eligible customers in the Southern region take out creditor insurance

Survey of automotive dealers and manufacturer brands - partnerships

Introduction

Finance and leasing

Wells Fargo, Chase and Capital One hold the most partnerships with dealers...

... while leading used car dealers have their own finance arms such as DriveTime Sales and Finance...

...and J.D. Byrider's Car Now Acceptance Corporation

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, Chase and Toyota Financial Services hold the largest combined share of partnerships

Vehicle service contracts

The vast majority of dealerships have an arrangement for offering vehicle service contracts

...using Florida-based Fidelity Warranty Services and JMandA Group most regularly among non-tied providers

... followed by American Financial and Automotive Services, Allstate and CNA National Warranty

Two competitors would feature more prominently if their subsidiaries are viewed in combined terms

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

...as 21 brands reportedly operate their own contracts

While Ford is the leading individual partner, JM Family Enterprises leads as a combined group

GAP protection

The leading five non-tied competitors control less than half of dealers' non-tied partnerships...

...with the rest shared between over 20 other providers

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

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

Allstate is ranked second to JMandA Group when combining dealer and manufacturer partnerships

Prepaid maintenance

Dealers in the Southern region use at least a dozen non-tied providers of prepaid maintenance

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

Tire and wheel protection

More than 20 non-tied companies are identifiable for tire and wheel protection...

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

Minor damage protection

Over three quarters of dealers offering 'dent and ding' protection use a non-tied partner for this...

...including specialists such as Dent Wizard, Ding Monkey, IAS and Xzilon...

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

Road assistance

Thrifty Car Rental extends its own road assistance service to people buying used cars from it

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

Central States Health and Life Co. of Omaha is the leading underwriter for creditor insurance in the South...

...and just one manufacturer group offers creditor insurance

Excess wear and tear protection

JM Family Enterprises and Allstate are the main non-tied partners used by dealers

Three manufacturer groups work with external partners

Motor insurance

Dealers in the US (including the Southern region) rarely offer motor insurance...

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




LIST OF GRAPHICS / TABLES


0.0 EXECUTIVE SUMMARY

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

1.0 INTRODUCTION

2.0 MARKET ANALYSIS

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

Passenger car parc and new / used passenger car sales in the South, 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 South segmented by distribution channel: volumes, 2009 to 2013

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

New and used passenger car finance market in the South, 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 South, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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