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Global Automotive Manufacturers: Strategies in Finance, Insurance, Warranties and Assistance is a report and accompanying PartnerBASE™ dataset that provides a detailed overview of the involvement and partnerships of the world’s leading automotive manufacturer groups for six key types of automotive financial service namely: finance and leasing; creditor insurance; extended warranties; road assistance; motor insurance; and GAP insurance.

The groups in scope in this respect are BMW, Daimler, Fiat Chrysler, Ford, Geely, GM, Honda, Hyundai, Mazda, Mitsubishi Motors, PSA, Renault Nissan, Suzuki, Tata Motors, Toyota and VW (albeit note that the analysis also covers their China-based joint ventures, e.g. Bejing Hyundai), and the study is based on research covering upwards of 50 separate brands belonging to these groups across 40 countries, representing the world’s largest markets for passenger car sales.

For each of the groups, the study demonstrates the extent to which their individual brands have arrangements for offering one or more of the six automotive financial services in each of the 40 countries and, if so, the operating models used in these cases (e.g. single external partner, multiple external partners, joint venture partner, captive partner etc.) and the identities of the partner organisations in question. Among other benefits, the resulting analysis demonstrates which providers of the six automotive financial services have been successful in winning significant product partnerships with each group across multiple countries.

Key findings from the executive summary include:

- across the 40 countries, Santander holds the most partnerships with automotive manufacturer brands for finance and leasing, and also those that are likely to be most significant, given that it is the leading external provider in this arena in both unweighted and weighted terms;

- BNP Paribas Cardif is similarly prominent in creditor insurance sold via automotive manufacturer brands although while Allianz holds the most relationships for both motor and GAP insurance plus road assistance, it is overtaken in the weighted analyses for these products due to the presence of strong competitors in the giant Chinese and US markets;

- likewise, the co-owners of Car Garantie and Allianz claim the most partnerships for extended warranties but are overtaken by AmTrust Financial Services and JM Family Enterprises in the weighted analysis due to the vast size of the US market for this product;

- over the most recent five-year period, Toyota group has generated the most profit (before tax) from its captive financial services operation among the automotive manufacturer groups surveyed, and also the highest ratio of pre-tax profit from financial services to total pre-tax profit, albeit Renault Nissan group’s net receivables have been growing most quickly.

Table Of Contents

Global Automotive Manufacturers: Strategies in Finance, Insurance, Warranties and Assistance
TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
Where a large market exists for particular financial products, manufacturer brands generally offer them… 2
… with the most unrealised potential for motor insurance, given the relatively low weighted provision rate 2
Preferred operating models vary across the various automotive financial services in scope 3
Several organisations are making significant progress as partners to automotive manufacturer groups… 5
… including Santander for finance and leasing… 5
… BNP Paribas Cardif for creditor insurance… 5
… and Allianz for motor and GAP insurance plus road assistance 5
In the latter three cases, weighted shares are determined by the large Chinese and US markets… 5
… and the US is also influential for extended warranties, which benefits AmTrust Financial Services 6
10 INTRODUCTION 7
What is this report about? 7
The provision of financial services constitutes a core activity for leading automotive manufacturer groups… 7
Rationale 7
… as it supports both car sales and profitability 7
Methodology 8
Survey of manufacturer groups and brands 8
Definitions 9
Insurance, warranty and assistance products 9
Operating models 10
Weighted and unweighted analysis 10
Abbreviations 11
Currencies, exchange rates and inflation 11
PartnerBASE and market data annexe 11
Finaccord 12
20 GROUP STRATEGY OVERVIEW 13
New passenger car production 13
VW group is the world's largest producer of new cars and is followed by the Toyota and Hyundai groups 13
Finance and leasing 15
Unweighted and weighted provision rates 15
The Daimler and VW groups record the highest provision rates for finance and leasing… 15
… whether measured in unweighted or weighted terms 15
Operating models 17
Well over 50% of manufacturer brand finance and leasing schemes make use of non-captive partners… 17
… albeit with BMW, Daimler, Renault Nissan, Toyota and VW as the groups most likely to use a captive 17
Ten automotive manufacturer groups hold a stake in at least one joint venture finance company 17
Unweighted and weighted non-captive provider share of partnerships 20
Santander holds both the highest number of manufacturer partnerships and the most important ones 20
BNP Paribas edges ahead of Societe Generale in both the unweighted and weighted analyses 20
Creditor insurance 22
Unweighted and weighted provision rates 22
On a weighted basis, the average provision rate for creditor insurance is just under 95% 22
… which shows that it is offered in most countries where there is a significant market for it 22
Operating models 24
Brands belonging to PSA and Renault Nissan use captives for creditor insurance in many countries 24
BNP Paribas Cardif is the dominant provider of creditor insurance to automotive manufacturer brands 26
AXA's acquisition of the relevant division of Genworth Financial will strengthen its hand in this sector 26 GLOBAL

Extended warranties 28
Unweighted and weighted provision rates 28
Weighted provision rates for extended warranties are heavily influenced by activity in the huge US market 28
Hyundai and Kia the brands least likely to have established extended warranty schemes 28
Operating models 30
Two operating models dominate manufacturer brand provision of extended warranties 30
Unweighted and weighted non-captive provider share of partnerships 33
AmTrust Financial Services claims the highest weighted share of partnerships for extended warranties… 33
… followed by JM Family Enterprises, Allianz and the two co-owners of Car Garantie 33
Motor insurance 35
Unweighted and weighted provision rates 35
The BMW and Daimler groups are most likely to operate branded programs for motor insurance 35
… and the overall unweighted provision rate across all groups is over 70% 35
Operating models 37
Underwriters of motor insurance owned or co-owned by automotive manufacturer groups remain rare 37
Unweighted and weighted non-captive provider share of partnerships 40
Allianz is overtaken by Anbang in the weighted analysis of partnerships for motor insurance 40
Road assistance 42
Unweighted and weighted provision rates 42
Weighted provision rates for road assistance exceed 90% for all groups other than Toyota 42
Operating models 44
Almost three quarters of road assistance schemes are run in conjunction with a single, external partner 44
Unweighted and weighted non-captive provider share of partnerships 47
Allianz Global Assistance holds the most deals for road assistance with manufacturer brands… 47
… with Europ Assistance placed second by this (unweighted) measure 47
GAP insurance 49
Unweighted and weighted provision rates 49
Manufacturer brands regularly distribute GAP insurance where a significant market exists for it… 49
Operating models 51
… normally running the scheme in conjunction with a single, external underwriter 51
Unweighted and weighted non-captive provider share of partnerships 54
Relationships with eight brands in the US make AmTrust Financial Services a leader in weighted terms… 54
… pushing Allianz into second position in spite of its own portfolio of more than 40 partnerships 54
Financial performance of automotive manufacturer captive finance operations 56
Profitability 56
The captive finance arms of Toyota and Renault Nissan have tended to generate the highest profitability… 56
… with that of Toyota making the most significant contribution to overall group profitability 56
Net receivables 60
The worldwide net receivables of five automotive captive finance firms exceed USD 100 billion… 60
… and in eight cases they have been growing annually at double-digit rates in recent years 60
30 GROUP STRATEGY ANALYSIS 64
BMW group 64
Overview of operations and summary of financial services strategy 64
Through its captive, BMW concluded over 15 million new finance contracts in 2014… 64
… and sold more than one million insurance policies 64
Allianz holds partnerships with BMW in 20 of the 40 countries investigated 64
Daimler group 73
Overview of operations and summary of financial services strategy 73
Net receivables of Daimler group's finance captive increased rapidly between 2010 and 2014… 73
… with new contracts rising especially rapidly in Africa and the Asia-Pacific region in the latter year 73
Important product partners include Allianz, AXA, QBE, Talanx and Zurich 73

Fiat Chrysler group 81
Overview of operations and summary of financial services strategy 81
For finance and leasing, Fiat Chrysler utilises captive and joint venture providers… 81
… including FCA Bank (co-owned by Credit Agricole) in several European countries… 81
… albeit a strategic partnership has been concluded with Santander in the US 81
By weighted partnerships, The Warranty Group is the group's main supplier of extended warranties 81
Ford group 90
Overview of operations and summary of financial services strategy 90
Ford group regularly generates a high proportion of its total profit from its captive finance operations… 90
… peaking at more than 40% in both 2010 and 2014 90
Arch Capital Group and Cross Country Group benefit from their relationships with Ford in the US 90
Geely group 98
Overview of operations and summary of financial services strategy 98
Geely group has established a joint venture finance company in China with BNP Paribas 98
By weighted share of partnerships, Bank of China is the group's most important finance partner… 98
… while for motor insurance, ties with Sampo Group in the Nordic region are influential 98
GM group 105
Overview of operations and summary of financial services strategy 105
GM group is rapidly rebuilding its international captive finance and leasing operations… 105
… with profit before tax from these exceeding USD 800 million in both 2013 and 2014… 105
… boosted by operations bought back from Ally Financial in 2013 105
AmTrust Financial Services holds important deals for extended warranty and GAP cover with GM group 105
Honda group 113
Overview of operations and summary of financial services strategy 113
Operating income from financial services represented almost one third of group operating income in 2014 113
MSandAD Insurance Group works with Honda for motor insurance in five key Asia-Pacific countries 113
Hyundai group 122
Overview of operations and summary of financial services strategy 122
Operating income from financial services has consistently exceeded USD 1 billion in recent years… 122
… albeit the contribution that this makes to the group's profit is less than for many other large groups 122
Subsidiaries of Allianz work with the group in 14 out of 40 countries and those of Generali in ten out of 40 122
In its home market, extended warranties are organised via Hi Network, a broking company 122
Mazda group 130
Overview of operations and summary of financial services strategy 130
Mazda co-owns a finance and leasing company only in its home market of Japan… 130
… and works with external partners elsewhere, including subsidiaries of Santander 130
By weighted partnerships, the group's principal provider of road assistance is Allianz Global Assistance 130
Mitsubishi Motors group 137
Overview of operations and summary of financial services strategy 137
The group has established joint venture finance companies in three major Asia-Pacific markets… 137
… and has selected Ally Financial as its preferred finance partner in the US 137
The main insurance, warranty and assistance providers vary by product 137
PSA group 146
Overview of operations and summary of financial services strategy 146
Joint ventures co-owned by Santander are replacing captive finance operations in much of Europe 146
Net receivables have reduced slightly in recent years to just under USD 28 billion in 2014 146
Over 14 million new insurance policies and related contracts were sold in the same year… 146
… with many underwritten and managed on a captive or internal basis 146
Renault Nissan group 155
Overview of operations and summary of financial services strategy 155
Profit before tax from financial services reached a new high point of USD 275 billion in 2014… 155
… boosted by RCI Banque's finance penetration rate of 352% 155

and its in-force portfolio of 535 million insurance policies and related contracts 155
Apart from RCI Banque, other captive and joint venture finance companies operate in other major markets 155
Tokio Marine collaborates for motor insurance with brands owned by Renault Nissan in five countries 155
Suzuki group 164
Overview of operations and summary of financial services strategy 164
Suzuki's only captive finance business is that which operates in its Japanese home market… 164
… with external partners utilised elsewhere, most notably Bank of China and Santander 164
Tokio Marine holds relationships with it for motor insurance in India, Japan and Thailand 164
Tata Motors group 173
Overview of operations and summary of financial services strategy 173
The group's only ‘true' captive finance operation is that which it operates in India… 173
… which saw net receivables peak at USD 3 billion in 2013 173
Key international finance partners are Black Horse, Chase Auto Finance and FCA Bank 173
Toyota group 182
Overview of operations and summary of financial services strategy 182
The group offers at least one automotive financial service in all 40 of the countries investigated… 182
… with a captive finance business present in 24 of them and in 35 in total 182
Strong growth in total operating income has reduced the group's reliance on financial services 182
Via Aioi Nissay Dowa, MSandAD Insurance Group is the group's main strategic partner for motor insurance 182
VW group 191
Overview of operations and summary of financial services strategy 191
Pre-tax profit from financial services hit a new peak of USD 232 billion in 2014… 191
… helped by the consistent rise in net receivables in preceding years… 191
and sharp growth in the total number of new finance, leasing, insurance and service contracts 191
By a wide margin, BNP Paribas Cardif is the group's preferred provider for creditor insurance 191

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