Consumer Automotive Financial Services in Emerging Global Markets investigates the market for automotive financial services linked to sales of new and used passenger cars in ten important global markets. In addition to analysing the USD 182 billion market for finance and leasing services, the study also covers ancillary automotive financial services markets namely creditor insurance, motor insurance, road assistance, extended warranties and GAP insurance. The revenues generated from high margin ancillary products, which Finaccord quantifies for the first time in any published study, are crucial to enhancing the profits of a variety of market participants including dealers, manufacturers and independent finance providers. The report draws on a survey of 765 leading car dealerships in ten countries, namely Argentina, Brazil, China, India, Indonesia, Mexico, South Africa, South Korea, Taiwan and Thailand, as well as an analysis of the approach to consumer automotive financial services of leading manufacturer groups typically representing around 30 automotive brands, in the same countries. The PartnerBASE™ database that accompanies the report details each of the marketing initiatives for consumer automotive financial services traced by Finaccord for both dealers and manufacturers. Together, the report and database will provide you with the definitive guide to current and future opportunities in consumer automotive financial services in ten emerging global markets. Key findings from the executive summary include: - across the ten countries in question, the total value of the consumer automotive finance and leasing market in 2011 broke down between USD 123.4 billion in gross advances and assets leased attributable to new cars and USD 58.7 billion attributable to used vehicles; - revenues available to the automotive trade from the ancillary consumer automotive financial services investigated totalled approximately USD 22.1 billion in 2011, almost 90% of which was attributable to motor insurance; - the automotive trade was responsible for distributing more than 70% of the value of personal motor insurance for passenger cars in China, India and Indonesia in 2011; - international protagonists such as Allianz, AXA, BNP Paribas Cardif, HSBC, MAPFRE, Santander and Zurich, among others, are building partnerships with manufacturer brands and local importers in order to consolidate their position in markets that are often fragmented.

Table Of Contents

TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY . 1
New car finance contracts soared between 2007 and 2011, as the new car market boomed. 1
. while cash sales of used cars have grown faster than sales financed either at the point of sale or directly 2
The finance and leasing markets of China and India have performed best. . 3
.while some economies have experienced greater volatility because of the global financial crisis. . 4
.and Brazil has remained the largest market for car finance and leasing by value . 4
Tied providers are most important to dealers in Argentina, and least important to them in China . 4
The automotive channel is responsible for half of motor insurance premiums across these ten countries . 5
1.0 INTRODUCTION 7
What is this report about? . 7
The focus of the report is on financial services related to the sale of passenger cars to individuals 7
Rationale 7
The provision of financial services is essential to support both car sales and profitability. . 7
… with huge diversity in these services between countries and products…. 7
… which have yet to be explored in detail 7
Methodology 8
Dealer survey . 8
Manufacturer survey 10
Market data 12
Computation of market data is based on a complex set of assumptions and variables… . 12
…in order to provide market segmentations in unrivalled detail 13
External sources 13
Definitions 14
Finance and leasing products 14
Insurance, warranty and assistance products . 15
Captive, internal and tied providers . 15
Abbreviations and exchange rates 16
PartnerBASEâ„¢ . 16
Finaccord . 17
2.0 OVERVIEW 19
Introduction 19
Passenger vehicle data 20
The passenger car parc of these ten countries grew by 60 million vehicles between 2007 and 2011 20
New car sales fell in Mexico and South Africa over the same time frame . 21
Brazil has the largest used car market. . 22
. while South Korea has the second-largest market for used cars sold through dealers 22
The number of passenger cars per person is lowest in India and highest in Mexico . 23
Toyota features in the ‘top ten’ in every country in this study . 24
Finance and leasing 26
Market size and growth . 26
Brazil’s auto finance market exceeds that of China… 26
…while Argentina and Mexico slip behind for point-of-sale finance and leasing contracts… 26
… and Mexico falls even further behind on the value of finance and lease contracts 28
South Africa has the fifth-largest market by value 28
Private car finance fo TABLE OF CONTENTS
0.0 EXECUTIVE SUMMARY . 1
New car finance contracts soared between 2007 and 2011, as the new car market boomed. 1
. while cash sales of used cars have grown faster than sales financed either at the point of sale or directly 2
The finance and leasing markets of China and India have performed best. . 3
.while some economies have experienced greater volatility because of the global financial crisis. . 4
.and Brazil has remained the largest market for car finance and leasing by value . 4
Tied providers are most important to dealers in Argentina, and least important to them in China . 4
The automotive channel is responsible for half of motor insurance premiums across these ten countries . 5
1.0 . INTRODUCTION . 7
What is this report about? . 7
The focus of the report is on financial services related to the sale of passenger cars to individuals 7
Rationale . 7
The provision of financial services is essential to support both car sales and profitability. . 7
… with huge diversity in these services between countries and products…. 7
… which have yet to be explored in detail 7
Methodology . 8
Dealer survey 8
Manufacturer survey . 10
Market data . 12
Computation of market data is based on a complex set of assumptions and variables… . 12
…in order to provide market segmentations in unrivalled detail 13
External sources . 13
Definitions 14
Finance and leasing products 14
Insurance, warranty and assistance products 15
Captive, internal and tied providers . 15
Abbreviations and exchange rates 16
PartnerBASEâ„¢ . 16
Finaccord 17
2.0 OVERVIEW 19
Introduction . 19
Passenger vehicle data 20
The passenger car parc of these ten countries grew by 60 million vehicles between 2007 and 2011 20
New car sales fell in Mexico and South Africa over the same time frame . 21
Brazil has the largest used car market. . 22
. while South Korea has the second-largest market for used cars sold through dealers 22
The number of passenger cars per person is lowest in India and highest in Mexico . 23
Toyota features in the ‘top ten’ in every country in this study . 24
Finance and leasing . 26
Market size and growth 26
Brazil’s auto finance market exceeds that of China… 26
…while Argentina and Mexico slip behind for point-of-sale finance and leasing contracts… 26
… and Mexico falls even further behind on the value of finance and lease contracts 28
South Africa has the fifth-largest market by value 28
Private car finance for new cars nearly doubled in value between 2007 and 2011 31
Point-of-sale finance is becoming more common in aggregate . 32
New car finance and leasing made up two thirds of the market in 2011 by value 33
Survey results . 34
China is the only country where the provision of finance and leasing by dealers is not virtually universal 34
Dealers are most likely to work with a high number of finance providers in Brazil, India and Indonesia . 35
In Brazil and South Africa, dealers work with both tied and non-tied providers… . 36
… while nearly two thirds of dealers in Argentina work with tied providers only . 36
On average, half of all new cars are financed at the point of sale… . 37
… and take-up rates for used cars are higher than for new cars in Brazil and South Africa 37
The low uptake of point-of-sale contracts in China and Taiwan reflects consumers’ use of cash to buy cars 38
Hire purchase and hypothecated loans provide greater security than unsecured loans 38
Simple loans make up the majority of the market in seven out of ten countries… . 39
…while leasing contracts are popular in South Korea and Thailand . 39
All manufacturer brands have their own finance and leasing schemes in Argentina and Mexico . 40
Creditor insurance 41
Market size 41
Creditor insurance is compulsory in Argentina and effectively so in Mexico… . 41
…but the largest markets have a full range of death, disability and unemployment cover . 42
Survey results . 42
Provision rates by dealers range from nil to 100%. 42
…and reach 52% of dealers on average 43
Half of customers take out creditor insurance where relevant and possible… . 44
…with Brazil and India leading the way where this is not compulsory 44
. although higher dealer provision rates support overall take-up rates in Brazil and South Africa 45
All creditor policies found in Thailand offered full coverage for death, disability and unemployment . 47
Only a small minority of manufacturers or importers offers creditor insurance in India… . 49
… and these schemes are often organised on an indirect basis in Indonesia and South Africa . 49
Motor insurance 50
Market size 50
Manufacturer-branded motor insurance generates revenue of nearly USD 20 billion. . 50
. which is half of the personal passenger car motor insurance market across the ten countries… 51
… rising to three quarters or more in three countries . 51
Survey results . 52
Over 90% of dealers interviewed offer motor insurance in eight out of the ten territories . 52
South Korean dealers worked with the smallest number of motor insurance providers . 53
No dealers in China were found to rely solely on manufacturers’ or importers’ insurance schemes . 53
Average take-up rates for new cars for the region as a whole exceed 60% . 56
Overall take-up rates for used cars are highest in China, India, Taiwan and Thailand . 57
Dealers in four countries only sell motor insurance policies that go beyond liability cover . 58
Chinese manufacturers and importers lag behind for the provision of motor insurance 60
Road assistance . 61
Market size 61
Long factory warranties in South Korea boost the size of its market for embedded road assistance 61
Survey results . 62
The average dealer provision rate exceeds 90% across these countries . 62
Dealers in Brazil, India, South Korea and Thailand only worked with one provider for road assistance… 63
… which was their car brand’s tied provider in South Korea and Thailand . 64
The uptake of road assistance with used cars varies dramatically by country… 65
. falling close to zero in India when taking account of the low provision rate of road assistance for used cars . 67
China is the only country where a minority of manufacturers and importers offers road assistance . 69
Extended warranties . 70
Market size 70
South Africa is the only country with a large market for used car extended waranties… . 70
Survey results . 71
…while the provision rate by dealers was at its highest in Mexico 71
The highest numbers of competitors were found in China and South Africa, for differing reasons . 71
Dealerships rely on manufacturer or importer extended warranty programs in most countries . 72
Take-up rates for new cars are highest in Brazil and for used cars in South Africa 74
Overall take-up rates are very low in east Asia 74
A majority of manufacturers provide extended warranties in just three countries out of ten 76
GAP insurance 77
Market size 77
Only three countries offer GAP insurance as a defined product in its own right… . 77
Survey results . 78
…though provision is nearly universal in two of them 78
Dealerships in India work with the highest number of providers for GAP insurance 79
Non-tied providers of GAP insurance are used by a majority of dealers . 79
Average acquisition rates for GAP insurance are around 40% in South Africa. . 81
.while overall take-up rates fall most sharply in India . 82
One manufacturer brand offers GAP insurance in Indonesia 84
3.0 ARGENTINA. 85
Introduction . 85
Passenger vehicle data 86
New car sales showed strong, fresh gains after a brief period of decline. 86
.while both dealer-intermediated and private used car sales maintained steady growth as well . 86
European manufacturers make up most of the top ten brands in Argentina… . 88
…with Volkswagen continuing to lead the passenger car market . 88
Consumer automotive finance and leasing market 90
Market size and growth 90
Sales involving finance just edge out cash-only sales. 90
.as the finance market made strong gains in a decade of growth . 90
Types of finance and leasing product . 93
Simple unsecured loans form the largest share of financing… . 93
…while communal ‘savings plans’ remain a popular form of lending 93
Consumer automotive insurance, warranty and assistance markets 94
Market sizes 94
Motor insurance makes up the overwhelming majority of the market. 94
Types of creditor insurance policy . 97
Simple credit life insurance is an automatic feature of finance in Argentina 97
Types of motor insurance policy 97
Third party liability dominates the motor insurance market by a four to one margin . 97
Automotive dealer survey . 98
Provision of consumer automotive financial services . 98
Finance and motor insurance are universal offerings among dealers . 98
Number and nature of schemes. 99
Manufacturer-tied financing remains the most popular source for dealers . 99
Consumer uptake of automotive financial services 101
Take-up rates indicate a reluctance to invest in additional products for used vehicles . 101
Competitor dynamics: dealer partnerships . 103
Finance and leasing: point-of-sale financing for new cars is taken up by less than half of customers. 103
Creditor insurance: obligatory cover boosts take-up rates to 100% 105
Motor insurance: take-up rates correlate to financing rates . 105
Extended warranties: these are unavailable for used cars, and are seldom purchased for new ones 107
Road assistance: a high take up rate is linked to automatic inclusion with new vehicle purchases . 108
Automotive manufacturer brand survey 110
Provision of consumer automotive financial services . 110
All manufacturers surveyed offer financing, creditor insurance and motor insurance 110
Competitor dynamics: manufacturer brand partnerships . 112
Finance and leasing: nearly 40% of the manufacturers surveyed use captive finance providers… 112
…with the top three finance firms sharing half the total market . 112
Creditor insurance: Cardif Seguros dominates this market . 114
Motor insurance: La Caja and Meridional lead a fairly tight field 116
Extended warranties: these are the exclusive domain of the manufacturer brands (or their importers) 118
Road assistance: this is similarly available solely through manufacturers’ own provision 119
4.0 BRAZIL . 120
Introduction . 120
Passenger vehicle data 121
The number of new passenger cars sold in Brazil is rising at more than 8% per annum. 121
.whilst the numerically significant used car market also remains positive . 121
Fiat, Volkswagen and Chevrolet each hold a large segment of the Brazilian market . 123
Consumer automotive finance and leasing market 124
Market size and growth 124
The volume of finance and leasing contracts is growing at around 6% per annum… 124
…and used car loans issued at the point of sale are an important part of this picture 124
The value of all types of finance and leasing contracts is increasing…. 125
…but the quickest growth relates to direct lending for new car purchases . 125
Types of finance and leasing product . 127
‘Consortium loans’ are an interesting feature of the Brazilian market . 127
Consumer automotive insurance, warranty and assistance markets 128
Market sizes 128
Motor policies and creditor insurance together account for more than 90% of all revenues 128
Policyholders are able to choose, and vary, the amount of GAP coverage they require . 128
Extended warranties are popular in Brazil, but they generate much less revenue than creditor insurance 128
Types of creditor insurance policy . 131
Virtually all creditor policies intermediated by dealers cover a broad range of risks . 131
Types of motor insurance policy . 132
In Brazil, hardly any dealers distribute third-party liability-only policies 132
Automotive dealer survey . 133
Provision of consumer automotive financial services . 133
Several products are universally available, but less than half of dealers offer extended warranties 133
Number and nature of schemes. 134
Consumer uptake of automotive financial services 136
Uptake of motor insurance at the point of sale is relatively low, in spite of universal availability 136
Brazil has the highest uptake of extended warranties among new car purchasers 136
Nearly half of finance and leasing customers also acquire creditor insurance at the point of sale 136
Competitor dynamics: dealer partnerships . 138
Finance and leasing: widespread multiple partnerships create a market with several key players . 138
Creditor insurance: underwriters partner directly with lenders rather than with car dealers . 140
Motor and GAP insurance: in-house brokers (both captive and external) account for all dealer provision . 140
Extended warranties: around 40% of Brazilian dealers offer extended warranty schemes . 142
Road assistance: only a small proportion of dealers operate their own assistance scheme . 144
Automotive manufacturer brand survey 146
Provision of consumer automotive financial services . 146
Manufacturer-based provision of motor insurance is markedly lower than that of dealers . 146
Competitor dynamics: manufacturer brand partnerships . 148
Finance and leasing: captive providers play a key role in Brazil’s auto finance market 148
Creditor insurance: Cardif do Brasil and Indiana Seguros are the leading external underwriters 150
Motor and GAP insurance: captive and external brokers jointly account for around a quarter of schemes 152
Extended warranties: specialist provider The Warranty Group underwrites two brands’ schemes . 154
Road assistance: virtually all manufacturer brands organise their own, internal programs 156
5.0 CHINA . 158
Introduction . 158
Passenger vehicle data 159
New passenger car sales have soared in recent years. 159
.while the market for used cars still has to catch up . 159
A large number of brands compete in China 160
Consumer automotive finance and leasing market 161
Market size and growth 161
New car finance at the point of sale has grown especially fast since 2007… . 161
.while the volume of financed used cars progresses from a lower base . 161
The total value of point-of-sale finance is higher than direct lending . 162
Types of finance and leasing product . 164
Simple loans are the most common form of financing passenger cars in China 164
Consumer automotive insurance, warranty and assistance markets 165
Market sizes 165
Extended warranties are the second most important product sold at the point of sale 165
Types of motor insurance policy . 167
A limited form of third-party liability was made compulsory in 2006 167
Automotive dealer survey . 168
Provision of consumer automotive financial services . 168
Nearly all dealers offer motor insurance. 168
. but creditor insurance for car loans has a mixed history in China . 169
Number and nature of schemes. 169
Dealers prefer to work with external partners for the provision of finance and leasing and motor insurance 170
Consumer uptake of automotive financial services 172
The majority of drivers in China take out motor insurance through dealers 172
Competitor dynamics: dealer partnerships . 174
Finance and leasing: more than four in five dealers offer finance and / or leasing to their customers . 174
Motor insurance: the leading three insurers account for almost 80% of all partnerships with dealers . 176
Extended warranties: customers are more likely to take out extended warranties for used than for new cars . 178
Road assistance: there are high take-up rates for road assistance where the product is available . 180
Automotive manufacturer brand survey 182
Provision of consumer automotive financial services . 182
Provision rates by manufacturer brands tend to be lower than for dealers . 182
Competitor dynamics: manufacturer brand partnerships . 184
Finance and leasing: several manufacturer brands in China use captive finance providers 184
Motor insurance: about one in five manufacturers have partnerships with insurance companies . 186
Extended warranties: extended warranties are normally offered through internal provision 188
Road assistance: Allianz Global Assistance has established several important partnerships . 188
6.0 INDIA . 190
Introduction . 190
Passenger vehicle data 191
Sales of new passenger cars are rising at around 16% per year. . 191
.with this rapid growth being more than matched by the increase in used car sales 191
In India’s concentrated market, Maruti Suzuki accounts for almost half of new car registrations 193
Consumer automotive finance and leasing market 194
Market size and growth 194
The number of finance contracts (and indeed cash purchases) is growing quickly… 194
…with new car loans issued at the point of sale representing the majority of finance distribution . 194
The value of new finance and leasing contracts is rising more quickly than their volume. . 195
…and direct lending for new car purchases stands at nearly USD 6 billion 195
Types of finance and leasing product . 197
Simple loans, typically secured on the vehicle itself, are the mainstay of Indian auto finance . 197
Consumer automotive insurance, warranty and assistance markets 198
Market sizes 198
Regular motor policies account for more than three quarters of estimated revenues… 198
…although extended warranties also make a significant contribution in this market 198
GAP cover is widely available, and currently accounts for around USD 100 million in GWP 198
In India, creditor insurance is typically cross-sold with the underlying finance or leasing contract… . 199
…and road assistance policies almost always form part of a standard warranty . 199
Types of creditor insurance policy . 201
The majority of creditor policies sold by car dealers cover a broad range of risks 201
Types of motor insurance policy . 202
Virtually all motor policies sold by car dealers are of the comprehensive variety 202
Automotive dealer survey . 203
Provision of consumer automotive financial services . 203
Seemingly all dealers can provide motor insurance, whereas only around 45% offer GAP cover 203
Number and nature of schemes. 204
Consumer uptake of automotive financial services 206
In India, road assistance is often included within standard vehicle warranties… 206
…and the uptake of motor insurance at the point of sale is very high by international standards 206
Around 70% of new car purchasers also acquire an extended warranty via the dealer… . 206
…and nearly half of used car buyers take out an auto loan at the point of sale 206
Competitor dynamics: dealer partnerships . 208
Finance and leasing: leading providers include Axis Bank and Mahindra and Mahindra Financial Services . 208
Creditor insurance: partnerships for this type of cover are determined by the lenders themselves . 210
Motor insurance: this market is dominated by the joint-venture commercial insurers 210
GAP insurance: the top three providers jointly account for around 50% of partnerships . 212
Extended warranties: virtually all extended warranty schemes are linked to manufacturers . 214
Road assistance: specialist provider MyTVS partners with two Mahindra First Choice outlets . 216
Automotive manufacturer brand survey 218
Provision of consumer automotive financial services . 218
For most products, the level of manufacturer provision is similar to that of dealers 218
Competitor dynamics: manufacturer brand partnerships . 220
Finance and leasing: HDFC Bank and ICICI Bank each partner with five manufacturer brands . 220
Creditor insurance: Mahindra and Mahindra makes use of its captive broker for this type of cover 222
Motor insurance: two thirds of Indian manufacturers that offer this cover work with multiple underwriters 224
GAP insurance: Bajaj Allianz is the leading underwriter in this field 226
Extended warranties: Tata Motors’ scheme involves a specialist warranty administrator 228
Road assistance: Allianz Global Assistance and MyTVS are the active partners in the area 230
7.0 INDONESIA 232
Introduction . 232
Passenger vehicle data 233
New car sales have displayed very strong growth in recent years. . 233
.with used car sales only slightly behind . 233
Japan-based manufacturer brands account for over 90% of new car registrations. . 234
.with Toyota continuing to lead the passenger car market . 234
Consumer automotive finance and leasing market 235
Market size and growth 235
Sales involving finance are less significant than cash sales. . 235
.but have grown rapidly over the last few years . 236
Types of finance and leasing product . 238
Hire purchase was the only type of finance found to be used in Indonesia 238
Consumer automotive insurance, warranty and assistance markets 239
Market sizes 239
Motor insurance makes up the overwhelming majority of the market . 239
Creditor insurance was found to be mandatory for certain finance products 240
Types of creditor insurance policy . 241
The majority of creditor insurance policies cover only life and permanent disability . 241
Types of motor insurance policy . 242
Comprehensive policies dominate the motor insurance market 242
Automotive dealer survey . 243
Provision of consumer automotive financial services . 243
All dealers covered by the research offered finance and motor insurance. 243
…whilst none offered GAP insurance . 243
Number and nature of schemes. 244
Dealers were found to work mainly with external partners 245
Consumer uptake of automotive financial services 246
Nearly all drivers in Indonesia take out road assistance through dealers… 246
.and a majority also acquire finance and motor insurance at the point of sale 246
Competitor dynamics: dealer partnerships . 248
Finance and leasing: all dealers offer finance to their customers 248
Creditor insurance: this is automatically bundled within a number of finance products 250
Motor insurance: most dealers had a large number of schemes in place . 250
Extended warranties: only a couple of dealers offer extended warranties 252
Road assistance: dealers tend to offer road assistance directly themselves 252
Automotive manufacturer brand survey 254
Provision of consumer automotive financial services . 254
Provision rates by manufacturer brands tend to be lower than for dealers . 254
Competitor dynamics: manufacturer brand partnerships . 256
Finance and leasing: several manufacturer brands in Indonesia use captive finance providers . 256
Creditor insurance: around one fifth of manufacturer brands offer creditor insurance 258
Motor insurance: Astra Buana accounts for nearly half of the weighted share of partnerships 260
GAP insurance: this product was only offered by one manufacturer brand 262
Extended warranties: only two manufacturer brands promote extended warranties in Indonesia . 263
Road assistance: three out of four manufacturer brands used internal assistance providers 264
8.0 MEXICO 266
Introduction . 266
Passenger vehicle data 267
New car sales show a steep decline from which they have not yet recovered. 267
while used car sales through dealers are only just showing signs of life after a calamitous decade… 267
…as legal and illegal ‘chocolate’ cars imported from the US continue to have a dramatic effect on sales 267
Nissan continues to hold the top position among individual brands… 269
…while US-based manufacturers continue to struggle 269
Market shares overall remain fairly steady against declining sales . 269
Consumer automotive finance and leasing market 271
Market size and growth 271
Some type of financing is found in one third of private automotive sales. . 271
…while all types of financing have shown modest growth or slow decline since 2007 271
Point-of-sale finance, especially for new vehicles, remains the core of the market… 273
…while direct lenders are especially important for used cars 273
Types of finance and leasing product . 275
The vast majority of finance involves simple loans… . 275
…with only limited markets for finance or operating leases . 275
Consumer automotive insurance, warranty and assistance markets 276
Market sizes 276
Motor insurance accounts for the lion’s share of the combined market value. . 276
.with other forms of insurance and assistance combining to form only 15% of the market 277
Types of creditor insurance policy . 279
Almost all creditor insurance includes cover for unemployment, disability or both . 279
Types of motor insurance policy . 281
A lack of federal requirements for insurance means limited coverage for the national parc 281
Automotive dealer survey . 282
Provision of consumer automotive financial services . 282
All dealers surveyed offer finance, motor insurance and road assistance. . 282
Number and nature of schemes. 283
Manufacturers’ policies dominate warranties and assistance market, but not motor insurance 283
Consumer uptake of automotive financial services 285
Take-up rates for new vehicles substantially outstrip those for used vehicles 285
Competitor dynamics: dealer partnerships . 287
Finance and leasing: BBVA Bancomer is the largest external lender by a significant margin . 287
Creditor insurance: packaged with finance, this has a 100% take-up rate where offered 289
Motor insurance: this is purchased from dealers with almost 60% of new cars 289
Extended warranties: only one in ten new car owners buys this cover at the point of sale 291
Road assistance: free government aid impacts the sale of assistance packages 293
Automotive manufacturer brand survey 295
Provision of consumer automotive financial services . 295
Finance, motor insurance and road assistance are provided by all manufacturers surveyed 295
Competitor dynamics: manufacturer brand partnerships . 297
Finance and leasing: over half of manufacturers use external finance providers… . 297
…while captive NR Finance is the single largest finance provider by weighted share . 297
Creditor insurance: one quarter of manufacturers use external partners 299
Motor insurance: the top three insurers hold 50% of the weighted partnerships… 301
…with Inbursa potentially poised to make substantial inroads 301
Extended warranties: almost all manufacturers provide these themselves. . 303
Road assistance: again, manufacturers tend to organise this themselves . 305
9.0 SOUTH AFRICA. 307
Introduction . 307
Passenger vehicle data 308
New car sales plunged from 2007 to 2009 then recovered strongly. 308
. while used car sales increased steadily 308
Premium German brands are strong sellers in South Africa, alongside Korean models . 310
Consumer automotive finance and leasing market 311
Market size and growth 311
Consumers use the maximum amount of credit allowed under the National Credit Act 311
Used car finance volumes rose for both direct lending and point of sale lending, 2007 to 2011 311
The value of new lending rose faster than volumes. 312
.and used car point-of-sale finance became the largest segment by value from 2008 onwards . 312
Types of finance and leasing product . 315
Hire purchase is the standard type of loan in South Africa 315
Consumer automotive insurance, warranty and assistance markets 316
Market sizes 316
Used car sales generate a higher value of ancillary financial services revenue than new car sales . 316
.while road assistance is only sold bundled with warranties 317
Types of creditor insurance policy . 318
‘Retrenchment’ cover is common in South Africa. 318
Types of motor insurance policy . 320
Dealers nearly always sell comprehensive motor insurance only . 320
Automotive dealer survey . 321
Provision of consumer automotive financial services . 321
Only one type of financial product was not offered by at least 90% of dealers interviewed. 321
Number and nature of schemes. 322
Most dealers use all four of the main South African lenders 322
Consumer uptake of automotive financial services 324
Dealerships provide finance for new and used car customers at almost exactly the same rate. . 324
. because of structural features of the South African consumer finance market . 324
The uptake of GAP insurance in South Africa is one of the highest rates recorded in the world . 324
Competitor dynamics: dealer partnerships . 326
Finance and leasing: just one dealer used the manufacturer’s captive provider only . 326
Creditor insurance: three dealers had arranged their own partnerships, aside from their finance providers . 328
Motor insurance: McCarthy Insurance Services is the provider for Bidvest dealerships 328
GAP insurance: two underwriters hold more than half the non-tied partnerships between them 330
Extended warranties: SA Warranties leads, but multiple providers split the rest of this market between them. 332
Road assistance: specialist partners are required where cover is not available through extended warranties . 334
Automotive manufacturer brand survey 336
Provision of consumer automotive financial services . 336
Dealer provision of motor insurance lags behind that of manufacturer brands . 336
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