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Consumer Automotive Financial Services in the USA - Western Region investigates the market for automotive financial services linked to sales of new and used passenger cars to individual buyers in the Western 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 Western region of the US which includes the following states: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.

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 Western 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 55 leading car dealerships in the Western 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 Western region of the US.

Table Of Contents

Consumer Automotive Financial Services in the USA - Western 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 Western 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

Sales of new cars easily outpaced sales of used cars between 2009 and 2013

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

Consumer automotive finance and leasing market

Market size and growth

Close to 8 million cars were bought with finance or leasing in the Western region in 2013...

...in a market worth nearly USD 100 billion in new business in that year

Types of finance and leasing product

The vast majority of finance contracts are for simple loans with no option to return the car at the end

Consumer automotive insurance, service contract and assistance markets

Market sizes

Vehicle service contracts make up more than half the total value of policies sold by the automotive trade...

...and more than half of the vehicle service contract market is attributable to used car sales

Survey of automotive dealers and manufacturer brands - overview

Introduction

Provision of consumer automotive financial services

Finance and leasing, GAP protection and vehicle service contracts are available most often from dealers

Specialist used car dealers do not offer leases

Manufacturer brands intermediate motor insurance far more often than dealers

Number and nature of dealer schemes

On average, car dealers in the Western region use more than 16 providers for finance and leasing...

...and employ more than two providers for vehicle service contracts

Types of creditor insurance policy sold by dealers

Where offered, creditor insurance covers temporary as well as permanent incapacity

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

Used car customers take out vehicle service contracts more often than new car customers...

...although a substantial proportion of new car customers acquire prepaid maintenance

Survey of automotive dealers and manufacturer brands - partnerships

Introduction

Finance and leasing

Wells Fargo is the competitor most often named by dealers among their main non-tied lenders...

...with a range of different providers mentioned for sub-prime lending

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

Wells Fargo and Chase are the leading firms when combining dealer and manufacturer relationships

Vehicle service contracts

Less than a fifth of dealers rely solely on manufacturer brands' own schemes...

...with Zurich and Wells Fargo's Warranty Solutions subsidiary the main non-tied providers...

... in a market characterised by a high degree of fragmentation, as elsewhere in the US

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

...as 21 brands reportedly operate their own contracts

Certain manufacturer brands are likely to hold the highest market shares in a competitive market

GAP protection

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

...led by Allstate, Safe-Guard and JM Family Enterprises

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

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

When combining dealer and manufacturer partnerships, Allstate emerges as the likely market leader

Prepaid maintenance

Virtually all dealers offering prepaid maintenance use their manufacturer brand in this context

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

Tire and wheel protection

Five providers of tire and wheel protection are named by more than one dealer in the Western region...

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

Minor damage protection

DentPro and Xzilon are reasonably prominent specialists for 'dent and ding' protection

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

Road assistance

Specialist used car dealers rarely have an arrangement for offering road assistance

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

Only two underwriters are named by dealers in the Western region for creditor insurance...

...and just one manufacturer group offers creditor insurance

Excess wear and tear protection

Five non-tied partners are utilised by dealers for excess wear and tear protection...

...while three manufacturer groups work with external partners

Motor insurance

Dealers in the US (including the Western region) rarely distribute motor insurance...

... 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 West, 2013

1.0 INTRODUCTION

2.0 MARKET ANALYSIS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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