Finance & Insurance Archives | Auto Remarketing

AutoVerify partners with iA Dealer Services

AutoVerify announced earlier this month that it has integrated iA Dealer Services products into its AutoVerify Spotlight piece of its digital merchandising solution.

This partnership is designed to help dealers boost F&I penetration.

AutoVerify said it can give dealers a “one-stop-shop” for digital retailing, as its Spotlight, Research and E-Commerce functions are designed to help dealres connect with shoppers, answer questions instantly, verify credit info and build a “ready-to-desk” deal.

“Consumers are increasingly doing more research before their first visit to a dealership,” said George Steinsky, vice president of national sales at iA Dealer Services, in a news release.

“AutoVerify enables consumers to gain a better understanding of our products and coverages in advance. We believe this will be a great advantage for our dealers as studies have shown that consumers using tools like AutoVerify are more comfortable buying because they have some prior knowledge of the products being offered by the F&I manager.”

AutoVerify president Marty Meadows added: “This is a win for car shoppers, a win for dealers and a win for both AutoVerify and iA Dealer Services.

“Partnering with a trusted industry leader like iA Dealer Services helps better educate consumers to improve their vehicle purchase experience, helps dealers sell more iA Dealer Services products and adds value to AutoVerify Spotlight. Dealers have also told us how much pressure it removes from the dealership F&I manager by allowing them to avoid awkward conversations when trying to sell F&I to customers who have already calculated the cost of their vehicle without being introduced to these product options in advance.”

In other news from the company, AutoVerify announced last week that it has enhanced its credit tool that’s part of its digital retail platform. AutoVerify Credit+ is designed to help dealers “set realistic customer payment expectations,” while also providing detailed customer credit information and helping shoppers find affordable vehicles.

“Our company is laser-focused on solving pain points for our dealer customers,” Meadows said in a release. “Today, Credit+ helps dealers save time and resources by directing customers towards a vehicle they can afford and setting realistic expectations around the interest rates and payments they can expect to make. In the upcoming quarter, this solution will also allow dealers to determine whether a customer has negative equity on a vehicle, providing a robust understanding of that buyer’s financial position.”

Canadian Lenders Association welcomes Inovatec

Inovatec Systems Corp. recently announced it has joined the Canadian Lenders Association (CLA), which is comprised of more than 170 companies representing Canadian lenders in categories such as auto, consumer, home, and mortgages.

According to a news release, many of Inovatec’s current clients are existing CLA members, which will give these lenders additional insights into how the provider of cloud-based loan origination, management and servicing solutions will deploy strategy for streamlining lending processes.

The CLA also manages a roundtable of automotive lending executives, which will give Inovatec an opportunity to directly collaborate on ideas and innovations that will benefit this sector.

Inovatec’s integrated portal, LOS (loan origination system) and LMS (loan management system) can allow companies to automate the lending process while creating a differentiated user experience that is customized to the lender’s individual business model.

“Inovatec is always interested in engaging with the market and developing new solutions that will have a tangible and sustaining impact on our customers,” Inovatec chief executive officer and founder Vladimir Kovacevic said in the news release. “We are delighted to join the CLA and help lenders improve profitability and maximize efficiency through next generation solutions.”

The Canadian Lenders Association advocates the adoption of innovative technology and business models designed to drive the future of lending in Canada. The association works with a range of financial services providers throughout the country and with provincial and federal governments to develop standards that benefit both the consumer and the economy.

“We welcome Inovatec into our organization as a well-respected member of the Canadian lending community. Their solutions are embraced by many members in the automotive sector, and we expect that other lenders will find their strategies and solutions equally beneficial,” CLA senior advisor Tal Schwartz said.

“We look forward to collaborating with Inovatec so that we can collectively elevate best practices within the industry and serve the needs of our members,” Schwartz went on to say.

J.D. Power: Crisis intensifies what dealers want from lenders

J.D. Power sees the coronavirus pandemic as a significant opportunity for Canadian auto finance companies, especially as overall industry satisfaction readings are mixed year-over-year.

As the operational and financial effects of COVID-19 cause havoc to the auto sector and bring new-vehicle sales to a crawl, J.D. Power said lenders have a unique opportunity to support dealers and position themselves competitively in the post-pandemic era.

In fact, according to the J.D. Power 2020 Canada Dealer Financing Satisfaction Study released on Thursday, dealers’ satisfaction with their lender hinges on the lender’s ability to be responsive, provide value-added insights and leverage digital communications.

“The current environment has ramped up the need for digital channels,” said Patrick Roosenberg, director of automotive finance at J.D. Power. “As lenders further develop their digital channels, dealers will need training to fully execute transactions from credit applications to funding. This is an area where lenders can excel and gain a competitive edge.

“Even when the social distancing requirements subside allowing shoppers to go back into dealerships, these digital transactions will continue to grow as consumer demand dictates the desire for this option,” Roosenberg continued in a news release.

Within the study, dealers identified the most preferred communication channels through which they want to interact with sales representatives and retail credit analysts.

Additionally, sales reps who exceed dealer expectations by providing their dealer partners with specific value-added insights and competitive intelligence can have a significant effect on overall satisfaction and dealer intent to send more business, according to J.D. Power.

“Lenders need to capitalize on their sales representatives’ ability to capture incremental business and utilize the most-effective communication channels,” Roosenberg said. “Doing so will allow them to cater to the needs of dealers and help overcome current challenges, and it will act as a springboard for future mutual business growth in the post-pandemic era.”

Study rankings

J.D. Power highlighted Acura Financial Services ranked highest in the captive lender segment with a score of 934 (on a 1,000-point scale).

Ford Credit came in second at 912, and Honda Financial Services landed in third at 886 ranked third.

J.D. Power pointed out overall satisfaction in the captive segment declined to 869 from 883 in 2019.

Among non-captive lenders, J.D. Power noted that TD Auto Finance ranked highest for the third consecutive year with a score of 912.

Scotiabank came in second at 908, and Conexus Credit Union landed in third at 901.

In the non-captive segment, J.D. Power noted overall satisfaction climbed to 889, up from 878 in 2019.

In the lease segment — a new addition to the 2020 study — J.D. Power said Ford Credit ranked highest with a score of 903. Honda Financial Services finished second at 888, and Toyota Financial Services came in third at 885.

The lease segment’s overall satisfaction score was 859, according to J.D. Power.

The 2020 Canada Dealer Financing Satisfaction Study, now in its 22nd year, captured 7,782 finance provider evaluations across the three segments from new-vehicle dealerships in Canada. The study was fielded in February.

Retail Rankings — Captive

Acura Financial Services: 934
Ford Credit: 912
Honda Financial Services: 886
Toyota Financial Services: 882
Segment average: 869
Kia Motors Finance: 865
Hyundai Motor Finance: 831
GM Financial: 795
Nissan Canada Finance: 795

Retail Rankings — Non-captive

TD Auto Finance: 912
Scotiabank: 908
Conexus Credit Union: 901
Segment average: 889
Bank of Montreal: 888
RBC Royal Bank: 873
Scotia Dealer Advantage: 867
Caisse Populaire Desjardins: 858
CIBC: 849
ATB Financial: 843
IA Auto Finance: 843
Greater Bank of Canada: 834
National Bank of Canada: 829
Tricor Lease & Finance Corp.: 816
AutoCapital Canada: 793
Carfinco: 749

Lease

Ford Credit: 903
Honda Financial Services: 888
Toyota Financial Services: 885
Segment average: 859
Kia Motors Finance: 850
Hyundai Motor Finance: 813
Nissan Canada Finance: 795
GM Financial: 786
SCI Lease Corp.: 640

5 highlights from Axis Auto Finance 2019 fiscal year report

This past Friday, Axis Auto Finance reported financial results for its 2019 fiscal year that ended June 30 and included the full 12 months of operations the acquired entities of Cars on Credit Financial (COCF) and Trend Financial Corp.

As a result, Axis posted several year-over-year gains since the comparative 2018 fiscal year included only the post-acquisition period of five and three months of COCF and Trend operations, respectively.

The company reported its originations for the 2019 fiscal year came in at a record $67.2 million, as compared to $30.2 million in 2018. Officials said they arrived at the result from increased penetration in existing markets and expanding into new markets to create a national platform. 

Axis highlighted the increase in originations contributed to the growth in gross finance receivables, which increased to $114.7 million at June 30 from $111.5 million a year earlier.  

The company’s 2019 fiscal revenues of $31.9 million represented an increase of 102% from $15.8 million generated during the previous fiscal year, again stemming from a full year of combined operations across all acquired entities, portfolio growth and steadily increasing portfolio yields.

Axis noted its portfolio yields increased year-over-year, achieving an average yield of 35.9% in fiscal 2019, as compared to 35.7% in fiscal 2018.

Officials acknowledged their annualized credit losses rose from 7.2% in fiscal 2018 to 10.3% in fiscal 2019. 

“The increase in the loss rate is the result of higher default rates and higher severity of loss,” they said.

After computing all of those figures, Axis arrived at a net loss for fiscal 2019 of $3.9 million or $0.040 per share, as compared to a net loss of $3.7 million or $0.056 per share for fiscal 2018. 

Officials added book value of the company was $33.9 million at the end of the fiscal year, or $0.35 per share.

Dealertrack Canada sees 2018 finish with stable retail prices

Along with four other interesting statistics about how the Canadian retail used-vehicle market closed 2018, analysts also highlighted prices for the majority of the Top 10 funded used vehicles sold through the Dealertrack Canada stayed nearly steady.

With six of the vehicles recording year-over-year increases and four recording declines, the average cash price of the Top 10 funded used vehicles in December remained relatively flat with a rise of only 0.9 percent compared to 12 months earlier.

Despite the hold on pricing in 2018, the company said the total number of Top 10 funded used vehicles the Dealertrack Canada online credit application network rose by 4.1 percent.

Among the top 10 used vehicles, the second place Honda Civic saw the largest year-over-year average cash price gain with an 8.4 percent increase to $15,310.

Recording the most significant annual price drop was the Dodge Journey sliding by 6.8 percent to $18,356.

Other insights from December’s overall Top 10 funded used vehicles data included:

— The most popular trade-in year was 2015.

— The average Top 10 funded vehicle was 40.0 months old, down from 40.7 months a year earlier.

— The average cash price paid was $20,088, up $19,539 a year earlier.

— Used buyers average annual income was $57,777, up from $55,318 a year earlier.

Source: Dealertrack Canada

Axis Auto Finance enters Quebec

Before the calendar turned to 2019, Axis Auto Finance expanded its footprint to serve dealers who have potential buyers with soft credit profiles.

The publicly traded, non-prime finance company announced that it has entered the Quebec market by opening an office in Montreal.

Axis pointed out that Quebec is the second largest province in Canada by population and has historically been a strong market for non-prime auto finance.

The company highlighted that it has employed a number of individuals with a strong pedigree in the Quebec market. Axis shared that it has already received dozens of requests from dealers looking for non-prime financing options.

“With our entry into Quebec, Axis has achieved its stated goal of completing a national roll-out in 2018,” Axis chief executive officer Todd Hudson said.

“We expect Quebec originations to be a major contributor to strong portfolio growth in the very near future,” he added.

Auto-loan importance noted in TransUnion Canada 2019 economic forecast

Here is some cautiously optimistic projections dealerships and finance companies can take into the new year as Canadian consumers continue to prioritize their auto-loan commitments.

Despite a potential slowdown in the Canadian economy over the next year, TransUnion Canada said the Canadian consumer credit market is expected to see continued growth in consumer-level debt and no significant increases in delinquency rates.

According to the its Industry Insights Report released on Thursday, TransUnion Canada projected that average consumer debt balances will continue to increase for Canadians across mortgage, credit card and other non-mortgage related debt including auto financing through 2019 and that serious delinquency rates will either decline or remain steady over the next year.

Analysts explained the continued low delinquency environment portends a healthy consumer credit market within the current economic climate. However, TransUnion Canada acknowledged a potential slowdown in the Canadian economy in 2019, combined with soft wage growth, heightened uncertainty beyond Canadian borders and continued interest rate increases may cause some challenges.

The credit bureau cited information from Oxford Economics that Canada’s GDP growth is widely expected to slow from an expected rate of 2.2 percent in 2018 to 1.9 percent in 2019. TransUnion Canada noted this slowdown in economic activity may impact consumer spending and employment levels, which could put stress on consumers’ capacity to service debt.

At this time, none of these factors are significant enough to negatively impact the outlook for the consumer credit market in 2019, according to Matt Fabian, director of financial services research and consulting for TransUnion Canada.

“The Canadian consumer credit market has performed extremely well over the past several years, with solid growth supported by strong economic fundamentals,” Fabian said.

“Looking into 2019, we anticipate a continuation of these positive trends, which is good news for Canadian credit consumers,” he continued. “However, there are signals of a mild economic slowdown emerging, which presents an opportunity for Canadian consumers and businesses to plan and evaluate different potential scenarios that could impact their ability to continue to responsibly manage their debt.”

The year ahead: 2019 forecast

TransUnion Canada’s forecasting models provide forward-looking insights for consumer credit balances and delinquency rates, and incorporate dozens of credit, behavioral and macroeconomic variables.

The 2019 forecast indicated that the outlook remains positive for the Canadian credit market, with continued opportunities for growth and balanced risk despite some potential economic challenges.

At the conclusion of 2019, TransUnion is forecasting that the average mortgage balance will increase by 3.4 percent over the forecasted year-end 2018 level to $274,533, and average non-mortgage debt balances will reach $30,687, a 2.8 percent annual increase.

Serious delinquency rates are forecasted to decline or remain steady for most credit products, according to the report.

Credit card delinquency rates at higher risk of an increase

TransUnion Canada predicted credit cards are the one major credit product that is forecast to have a slight increase in delinquency rates in 2019, with other products expected to have lower delinquency rates.

TransUnion Canada research studies have shown that, when faced with economic pressure, consumers often have a hierarchy around which debt payments they continue to stay current on and which they allow to go delinquent. The analysis showed that, for consumers with credit cards, auto loans and mortgages all in their wallets, credit card payments are generally the first product type that consumers will go delinquent on, preferring to keep payments like auto loans and mortgages in good standing if they are forced to choose.

While Canada is not expected to slip into a recession in 2019, Fabian explained any significant economic headwinds would likely put credit cards at a higher risk for increased delinquency rates relative to other major credit products.

“Consumers’ ability to manage their debt is directly impacted by their disposable income,” Fabian said. “If we were to see an economic downturn and pressures on consumer income, we would anticipate credit cards to be the product that would be impacted first in terms of higher delinquencies.

“At the same time, we would expect balances to rise as consumers look to cards to help make ends meet,” he continued. “While current expectations are for continued positive economic growth in 2019, lenders are likely to monitor their portfolios closely in the event of any negative news."

Potential for regional shocks across Canada

TransUnion Canada sees the possibility for regional economic shocks across Canada contributing to a slight rise in overall delinquency. These potential challenges include the impact of steel and aluminum tariffs on manufacturing, continued decline in oil prices and overall industry disruption such as the recent news of the General Motors plant closure in Oshawa.

“While we see the impact of tariffs and localized shocks as having very little impact on overall delinquency across Canada, it would certainly be felt by consumers in those regions and some consumer credit portfolios may be regionally impacted,” Fabian said.

“Depending on the severity and length of the oil price decline, some regions could experience delinquency rate increases of up to 50 basis points, similar to what occurred in Alberta and Saskatchewan following the last oil price drop,” he continued.

“Typically, as these economic shock events occur, we tend to see some unemployment increases lagged by a rise in delinquency as incomes and capacity to service debt are constrained,” Fabian went on to say.

Mortgage balances to slightly increase

TransUnion Canada pointed out stricter mortgage qualifying rules and stress tests have been successful in tightening entry into the mortgage market for many consumers during the past 12 months.

As both consumers and lenders continue to navigate the new environment, TransUnion Canada expects a slight increase in average mortgage balance per consumer, with new mortgage origination amounts reflecting the still-elevated home prices in many major metropolitan areas.

“The tighter mortgage rules will likely have some positive impact on rising delinquency rates when Canada faces the next economic downturn. Given that the Canadian market already enjoys very low delinquency in the mortgage space, the stress testing rules should help bolster this and reduce the impact of any shock,” Fabian said.

Non-mortgage delinquency will continue to drop

Touching on the space that includes auto financing, the report highlighted a decrease in overall consumer non-mortgage delinquency is expected to persist through 2019 as consumers continue to do a good job of managing their credit obligations.

But analysts emphasized delinquency rates are sensitive to economic events including, but not limited to, interest rates, unemployment, inflation and wage growth.

“Core economic fundamentals are likely to remain relatively stable through the coming year, and we predict this will have a correspondingly positive impact on delinquency levels,” Fabian said.

“Additionally, when we look at consumer payment patterns — particularly the ratio of how much consumers with a credit card balance are paying off in addition to their minimum required payments — we continue to see a healthy positive spread, which indicates that most Canadian consumers have some excess capacity to absorb shock,” he went on to say.

More information about the 2019 consumer credit forecast and details about the latest 2018 TransUnion Canada Industry Insights Report, including details about a variety of credit products, can be found here.

Canada Drives sees its financing applications grow 20%

Canada Drives is enjoying year-over-year growth of 20 percent for its online auto financing application solution.

The company recently highlighted more than 502,000 Canadians applied for an auto loan during the past 12 months. That figure marked a rise from the approximately 417,000 Canadians who applied for auto financing over the previous period.

Canada Drives indicated Ontario led regional auto loan application growth at 29.4 percent, followed by British Columbia at 22.4 percent.

“Canadians are looking for a frictionless and quick way to access auto financing,” said Cody Green, founder and co-chief executive officer of Canada Drives.

 “We have been successful by focusing on giving customers what they want and constantly improving the consumer experience,” Green continued. “Our service has drawn tremendous interest from the car-buying public because the traditional ways of obtaining auto financing are no longer practical in a digital world.”

Canada Drives is designed to make it easy for customers to apply and secure financing online for auto or personal loans. Green said that Canada Drives is a rare example of a company that has continued to grow their customer base year-over-year even while incumbent financial institutions have started to adopt similar approaches to upstart financial technology companies.

“Our service has evolved quickly with the demands of our customers and we aren’t tied down to any legacy systems which allows us to move much quicker,” Green said.

“These are benefits of being a digital first company and knowing from day one that we would have to continue to evolve to keep providing value to the customers we serve,” he went on to say.

A recent example is the development of a messaging platform that can allow customer support teams to contact consumers directly from office computers to mobile phones via text message. This process can allow for instant communications with consumers who may not always be able to e-mail or speak on their phone.

“Paired with 24/7 support, this has allowed a level of customized service that is hard to replicate,” Canada Drives said.

And the company is embarking on growth into the United States and United Kingdom. Green discussed the developments in the Auto Remarketing Podcast episode that's available here.

US company acquires CUL Administration of Canada

Auto Financial Group (AFG) — a Houston-based company that provides an online, residual-based, walk-away vehicle financing product called AFG Balloon Lending, as well as vehicle leasing and vehicle remarketing to financial institutions across the United States — now has a significant presence in Canada.

According to a news release distributed on Thursday, AFG announced that it completed the acquisition of Credit Union Leasing Administration of Canada on Aug. 1.

CUL Administration of Canada provides a turnkey program to Canadian credit unions to enable them to participate in consumer and commercial vehicle leasing.

The announcement indicated Peter Birks, president of CUL Administration of Canada, will continue to run operations as the company integrates with Auto Financial Group.

Company leadership explained AFG’s growth into new markets demonstrates its commitment to financial institutions across the United States and Canada to meet the rising consumer demand for residual based financing. 

“We are excited to welcome CUL Administration of Canada to the AFG team and look forward to their contributions,” said Richard Epley, chief executive officer of Auto Financial Group.

“The acquisition is perfectly aligned with Auto Financial Group's mission to provide innovative, revenue producing programs to financial institutions and will position the company for continued growth and success in the future,” Epley continued.

Mitsubishi enhances 3-part F&I lineup for franchised dealerships

Mitsubishi dealerships from Halifax to Victoria now have enhanced options for their F&I departments with upcoming special training so managers can get the most out of the products.

This week, Mitsubishi Motors Canada announced the launch of an improved Diamond Care Loan Protection product. Featuring two plans and an all-new experience, Diamond Care Loan Protection will complete Mitsubishi’s aftermarket lineup that includes:

— Diamond Care Mechanical Breakdown Protection
— Diamond Care Appearance Protection
— Diamond Care Vehicle Loss Privilege Program

Mitsubishi’s branded F&I protection products are administered by LGM Financial Services, a top provider of F&I products supplying Canada’s automotive sector. Co-operators Life Insurance Company is the underwriter for Diamond Care Loan Protection.

“Diamond Care Loan Protection was redesigned with both the customer and dealership in mind, and we’re excited to support Mitsubishi in bringing it to market,” said Jeff Schulz, executive vice president of marketing at LGM Financial Services.

“Not only does it simplify the process for our valued dealer partners, but most importantly, it provides the customer with affordable protection in case of an unforeseen life event.”

The automaker highlighted the improved Diamond Care Loan Protection program consists of two plans to accommodate the various needs of Mitsubishi customers, including Carefree and Essential.

Carefree is a customizable plan with coverage for life, critical illness, disability or loss of employment. Carefree comes with simplified features, improved benefits and dynamic pricing. 

Essential is a new bundled plan with just enough of the above coverage to bring peace of mind to the customer. Both Essential and Carefree are available in the new HUB interface at a competitive premium.

“Mitsubishi is committed to providing our customers with the highest quality aftermarket protection products, and we’re thrilled to announce the relaunch of Mitsubishi Diamond Care Loan Protection,” said Kathryn Soublière, senior manager of sales operations at Mitsubishi Motors Canada.

“This customizable product provides an option for everyone, and delivers exceptional protection at an attainable price,” Soublière continued.

To support dealerships through the launch of this product, LGM will hold in-class roundtable training sessions where dealers can learn more about the new product, including its features, competitive advantages, best practices and more.

In addition to in-class training, LGM is celebrating the launch of Diamond Care Loan Protection with ‘Mitsubishi Day’ on Tuesday. LGM’s dealer development managers will visit Mitsubishi dealerships across Canada to answer questions and prepare for a successful launch.

To learn more, go to LGM.ca.