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Consumer Automotive Financial Services in Vietnam

  • October 2014
  • -
  • Finaccord
  • -
  • 46 pages

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

Table Of Contents

Consumer Automotive Financial Services in Vietnam
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 new and detailed analysis of the subject in Vietnam 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 5
Definitions 6
Finance and leasing products 6
Insurance, warranty and assistance products 6
Operating models 7
Tied and non-tied providers 8
Abbreviations 8
Exchange rate 8
PartnerBASE and market data annexe 8
Finaccord 9
2.0 MARKET ANALYSIS 10
Introduction 10
Passenger vehicle data 11
Trends in new car sales are heavily influenced by taxes imposed on imported vehicles 11
and reduced taxes on used cars since April 2013 have stimulated this market 11
Toyota sells nearly four times as many new vehicles as the next closest competitor 13
Consumer automotive finance and leasing market 14
Market size and growth 14
Used cars directly financed have seen the best growth by volume 14
though new cars financed at the point of sale make up the bulk of the market by value 15
Types of finance and leasing product 17
The point-of-sale finance market of Vietnam is dominated by loans with flexible interest rates 17
Consumer automotive insurance, warranty and assistance markets 18
Market sizes 18
In total, the automotive trade is likely to have sold contracts approaching VND 2 trillion in 2013 18
Survey of automotive dealers and manufacturer brands - overview 21
Introduction 21
Provision of consumer automotive financial services 21
Over 90% of dealers surveyed distribute three core automotive financial services 21
Opportunities may exist to create further finance and leasing partnerships with manufacturer brands 21
Number and nature of dealer schemes 23
Dealers typically work with more non-tied partners than tied ones for both finance and motor insurance 23
Types of motor insurance policy sold by dealers 25
Dealers sell separate policies for damage insurance 25
Sources of road assistance distributed by dealers 26
In Vietnam, factory warranties do not usually include road assistance 26
Consumer uptake of automotive financial services through dealers 27
A very clear majority of new car buyers take out finance and leasing at the point of sale 27
Prepaid service contracts appear to be a successful product for dealerships that offer them 27
Survey of automotive dealers and manufacturer brands - partnerships 29
Introduction 29
Finance and leasing 30
Dealers rarely rely solely on their manufacturer brand's tied provider 30
Vietcombank and TechcomBank hold the most partnerships with dealers 30
in a highly fragmented market 30
Toyota Financial Services dominates tied provider partnerships 32
followed by Techcombank 32
Toyota Financial Services has the highest implied share of new business on a combined analysis 34
with the top five competitors likely to account for half of the total market 34
Motor insurance 35
Only a minority of dealers rely solely on tied partners for motor insurance 35
with Baoviet as the non-tied provider named most often by dealers 35
Liberty Insurance holds the largest share of manufacturer partnerships as the provider for 15 brands 37
and is followed by PVI 37
Three underwriters are likely to account for close to three quarters of the market for new business 39
Extended warranties 40
The majority of dealers offering extended warranties utilise their manufacturers' tied schemes 40
with Ford, Honda and Mazda as the main brands active in this sphere 40
Road assistance 42
It is apparently the case that road assistance is always available from new car dealers 42
albeit never as a stand-alone service to be bought separately 42
Manufacturers either run assistance schemes themselves or use their tied motor insurance provider 43
albeit Geely and Nissan seemingly lack any official arrangement in this arena 43
Prepaid service contracts 45
Some dealerships operate their own schemes if their manufacturer brand does not have one 45
which is significant since only four manufacturer brands run these programs 45

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1
Key market data for consumer automotive financial services in Vietnam, 2013 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS 10
Passenger car parc and new / used passenger car sales in Vietnam, 2009 to 2013 12
Passenger car parc and new / used passenger car sales in Vietnam, 2009 to 2013 (table) 12
New light passenger vehicle registrations in Vietnam, segmented by manufacturer group, 2013 13
New and used passenger car finance market in Vietnam, segmented by distribution channel: volumes, 2009 to 2013 14
New and used passenger car finance market in Vietnam, segmented by distribution channel: values, 2009 to 2013 15
New and used passenger car finance market in Vietnam, segmented by distribution channel: values and volumes, 2009 to 2013 (table) 16
% split between the different types of finance and leasing contract organised at the point of sale in Vietnam, 2014 17
Total revenues from consumer automotive insurance, warranty, assistance and service contract markets in Vietnam, 2013 19
Total revenues from consumer automotive insurance, warranty, assistance and service contracts in Vietnam, 2013 (table) 20
Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in Vietnam, 2014 22
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Vietnam, 2014 (table) 23
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Vietnam, 2014 24
% split between the different types of motor insurance policy sold at the point of sale in Vietnam, 2014 . 25
% availability of road assistance through factory warranties, annual services, extended warranties, motor insurance, prepaid service contracts and as a stand-alone product in Vietnam, 2014 26
% of new and used car purchasers acquiring each type of automotive financial service at the point of sale in Vietnam, 2014 28
Provision of finance and leasing by dealers in Vietnam, 2014: provision rate, product sources and provider share of non-tied partnerships 31
Provision of finance and leasing by manufacturer brands in Vietnam, 2014: provision rate, operating models and weighted provider share of partnerships 33
Implied market shares of new business for finance and leasing at the point of sale in Vietnam, 2014 34
Provision of motor insurance by dealers in Vietnam, 2014: provision rate, product sources and provider share of non-tied partnerships 36
Provision of motor insurance by manufacturer brands in Vietnam, 2014: provision rate, operating models and weighted provider share of partnerships 38
Implied market shares of new business for manufacturer-branded and dealer-intermediated motor insurance in Vietnam, 2014 39
Provision of extended warranties by dealers in Vietnam, 2014: provision rate and product sources 40
Provision of extended warranties by manufacturer brands in Vietnam, 2014: provision rate, operating models and weighted provider share of partnerships 41
Provision of road assistance by dealers in Vietnam, 2014: provision rate and product sources 42
Provision of road assistance by manufacturer brands in Vietnam, 2014: provision rate, operating models and weighted provider share of partnerships 44
Provision of prepaid service contracts by dealers in Vietnam, 2014: provision rate and product sources 45
Provision of prepaid service contracts by manufacturer brands in Vietnam, 2014: provision rate, operating models and weighted provider share of partnerships 46

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