Toyota Motor Credit Corp. (TMCC) said it made a complex financing move that the captive said was “demonstrating the company’s commitment to innovation and advancing its reputation as an industry leader.”
On Thursday, TMCC announced that it issued its first secured overnight financing rate (SOFR) medium-term note (MTN) transaction. The company indicated the one-year U.S. dollar-denominated issuance settled on Tuesday and raised $1.55 billion from institutional investors.
The development represents the company’s first SOFR-linked MTN transaction in the U.S. dollar market, and the first time a captive has issued a floating-rate MTN based on SOFR. Officials pointed out the London Interbank Offered Rate (LIBOR) is scheduled to discontinue after 2021, and many companies are looking to SOFR as an alternative reference rate to price U.S. dollar loans and derivatives.
Cindy Wang, group vice president of treasury for Toyota Financial Services — the finance and insurance brand for Toyota in the United States — explained the importance of the company’s SOFR issuance.
“Our broader corporate liquidity strategy is to ensure that we maintain the ability to fund assets and repay liabilities in a timely and cost-effective manner, even in adverse market conditions. This transaction supports our strategy by further diversifying our financing structures, and places us at the forefront of companies preparing for the discontinuation of the LIBOR index,” Wang said in a news release.
“We’re pleased that the offering was met with enthusiasm from large investors seeking exposure to SOFR. This strong demand allowed TMCC to upsize the deal significantly from its initial target," Wang added. “We appreciate the support from our investors and banking partners in making this SOFR issuance such a success.”
TMCC reiterated that it has long demonstrated the ability to pursue innovative funding solutions. The company previously offered diversity and inclusion bonds, what it believes was the auto industry’s first-ever green bond and a SOFR floating-rate commercial paper transaction to the short-term capital markets.
For more information on TFS’ capital markets programs, visit www.toyotafinancial.com.
Wolters Kluwer is quickly approaching a dozen awards collected so far this year for its solutions to help finance companies.
According to an announcement distributed this week, Wolters Kluwer’s Lien Solutions has earned two 2019 Golden Bridge Awards for superior product innovations developed for the benefit of its clients in the financial services industry. Lien Solutions was honored with a 2019 Golden Bridge Gold Award for its Portfolio Sync solution and a Bronze Award for its iLien Motor Vehicle solution.
The coveted annual Golden Bridge Awards program encompasses the world’s best in organizational performance, innovations, products and services, and customer programs from every major industry in the world. Lien Solutions was awarded its two 2019 Golden Bridge Awards based on its innovation in the following categories:
— Best IT Software, Portfolio Sync (Gold): This lien automated management solution was designed for clients who utilize multiple methods to submit Uniform Commercial Code (UCC) filings. Portfolio Sync can combine these clients’ existing iLien filings with public records data into one consolidated view. This capability can provide greater visibility into a finance company’s portfolio and identifies potential “gaps” or issues that may require remedial action in order to maintain and protect a lender’s security interests.
— Best IT Software Innovation, iLien Motor Vehicle (Bronze): iLien Motor Vehicle can deliver a single point of management for processing and managing motor vehicle titles. The tool can help automate, streamline and connect finance companies’ organizational workflows, improving the vehicle titling process and the ongoing management of vehicle titles. The solution can save time and reduce the likelihood of costly vehicle title rejections. Supported by Lien Solutions’ extensive experience in commercial lending, the solution can bring major benefits to those operating in the motor vehicle lien market.
“It’s no secret that for a business to achieve continued success, it must continuously look for innovative solutions that introduce new products and enhancements to the market in which it serves,” said Raja Sengupta, executive vice president and general manager of Wolters Kluwer’s Lien Solutions, which has garnered 11 industry awards so far in 2019.
“The development of our Portfolio Sync and iLien Motor Vehicle solutions perfectly embodies the spirit of creative invention that everyone at Lien Solutions has,” Sengupta continued. “That spirit of our team is what leads to these industry recognitions and, more importantly, helps our clients and their customers thrive. Simply put, innovation is part of our DNA.”
Dealership F&I staff who showcase products from autopom now can use a sales strategy that includes a hypothetical about being covered when the vehicle experiences problems at an inopportune time.
The California-based company now offers vehicle protection plans that include roadside assistance and nationwide breakdown coverage. Roadside assistance services from autopom and its providers are designed to ensure drivers have a vehicle backup and a mechanic’s assistance if a breakdown leaves them stranded or interrupts their scheduled plans.
“We call this automotive peace of mind,” autopom president and chief executive officer Mike Jones said in a news release. “We never want drivers to worry when they’re on their way to work, to school, or on vacation.”
Vehicle protection plans with roadside assistance and breakdown coverage from autopom start at $1,488 for California drivers who have an Asian or domestic model. Coverage starts around $2,500 in other states nationwide. Some offerings include added benefits, like interest-free payment plans.
To learn more about vehicle protection plans from autopom, go to extended-vehicle-warranty.com or call (800) 724.8141.
The final segment of Dealertrack uniFI now is available after the company’s revamped technology solution first arrived nearly a year ago.
This week, Dealertrack announced the launch of Digital Contracting on Dealertrack uniFI, putting the final piece in place to complete its single platform that can connect the entire deal workflow process from leads to contracts for the company’s network of approximately 22,000 dealers and more than 1,600 finance companies.
According to recent data from Dealertrack, one out of every four paper deals results in delayed funding due to missing or incorrect information. With Digital Contracting on Dealertrack uniFI, dealers can reduce data re-entry and ensure documentation is complete and error-free before it is submitted, helping eliminate re-contracting and speeding up funding from an average five days to as fast as the same day.
“Dealertrack uniFI combines as many as 51 different pieces of paperwork from the car deal process into a single online deal jacket, simplifying the car-buying journey for customers and adding efficiency to submission to lenders,” said Firas Makhlouf, chief information officer of Driver’s Village, a dealer group based in Cicero, N.Y., that has franchised stores connected to 21 brands.
“By integrating Digital Contracting into this powerful platform, we can now complete the full end-to-end car-buying process without the need to jump between multiple screens and technologies to get a single deal done,” Makhlouf continued in a news release.
In the past, Dealertrack acknowledged many dealers and finance companies have wavered from adopting digital contracting due to misconceptions such as heightened costs, workflow disruption and a perceived lack of critical mass utilization by all parties.
However, the company insisted that the reality today is that digital contracting is connecting more dealers and finance companies than ever before, making contracting easier and more efficient while also saving time and money by cutting out printing and shipping.
“Dealers and lenders alike recognize the exponential benefits of electronically managing contracts in transit to improve dealer-lender communication, increase operational efficiency and create a better consumer car shopping experience,” said Cheryl Miller, senior vice president and general manager of Dealertrack F&I and Titling Solutions.
“Digital Contracting on Dealertrack uniFI is challenging the status quo by giving dealers and lenders the ability to reduce handling errors and secure more deals and loan originations while better meeting the needs of today’s consumer,” Miller went on to say.
The Digital Contracting functionality on Dealertrack uniFI adds a host of new enhancements to the platform, including:
• One deal jacket: An end-to-end workflow from leads to contracts with all funding documents in a single location, including Aftermarket contracts.
• Real-time error display: Data entry validation rules run in real-time, showing in-line errors and alerts to the dealer for quick rectification and greater accuracy prior to contract submission.
• Live funding checklist: A dynamically growing, digital list of up-to-date lender-required documents as a particular deal is being finalized — and the status of each of those documents.
• Point of sale ancillary documents capture: Dealers can now snap and upload high quality stips and trailing document images with their tablets any time, up to the point of funding.
• Multiple device support: Engage customers on any device, anywhere in the showroom for a paperless digital review of contracts and an easier signing process — no paper required.
• Local paper out: If a digital contract ever needs to be converted to paper, it can now be done independently and on-demand by the dealer, with no fees attached.
“From creating a lead and penciling a deal to submitting for approvals and digital contracting, Dealertrack uniFI provides an all-in-one service designed with the end-user in mind,” said Will Pollard, finance manager of Tim Short Chevrolet, which has three rooftops in Kentucky.
“With Digital Contracting on Dealertrack uniFI, we are now seeing funding within minutes of submission, reducing customer wait times and freeing up cash for us to invest in new stock to drive more sales,” Pollard went on to say.
Digital Contracting on Dealertrack uniFI is available in all 50 states.
For more information about Digital Contracting on Dealertrack uniFI, visit Go.dealertrack.com/goDigital.
Dealerships wanting to expand their operations now can turn to Westlake Technology Holdings.
The finance company that originates installment contracts throughout the credit spectrum recently launched Westlake Capital Finance to provide commercial real estate loans to dealers.
The commercial real estate program from Westlake Capital Finance offers dealers the ability to purchase their current dealership (lease buyout), purchase additional or new locations or fund new construction of dealership facilities.
“Our goal is to service the needs of our dealerships on all levels,” group president Ian Anderson said in a news release. “Whether it’s financing their customers, inventory purchases, portfolio acquisitions or commercial real estate acquisitions, Westlake’s goal is to be the ‘one-stop shop’ for dealers’ financing needs.”
Westlake Capital Finance is a direct lender that can provides commercial real estate loans on most asset classes to fund uses such as ground-up construction, renovation/value-add opportunities and turnkey purchases.
“This is an exciting new division for the company,” director of commercial real estate lending Lauren Barnard said. “We look forward to providing much-needed financing solutions to auto dealers nationwide, helping them get the leverage they need to grow their businesses more than ever.”
Dealerships interested in learning more about the Westlake Capital Finance’s commercial real estate loan program can call (888) 682-0166.
AUL Corp. is aiming to keep its website as technologically advanced as the modern vehicles often covered by its F&I programs.
AUL just launched a new streamlined website following its recent addition of GAP and ancillary product offerings. AUL chief information officer Jose Fleites said in the coming months, the site will introduce an enhanced e-contracting and reporting environment designed to provide dealers and agents with a superior and seamless purchase and reporting experience.
Fleites noted these additions are part of the first phase of a multi-year revamp of the firm’s IT solutions.
“The retail automobile industry continues its transformation into an all-digital sales process, and as it does, it is imperative that we stay in front by providing agents and dealers the best tools to do their job easier, better and faster,” Fleites said in a news release.
“We are confident that our new digital solutions, and those still to come, will keep us on the leading edge of this ever-changing landscape,” he added.
Following the introduction of the new website and online tools, AUL said more developments are coming next year. The company will launch an enhanced accounting system that will further increase the accuracy and efficiency of its reporting and claims processes.
All of these changes follow last year’s introduction of Ocean, the company’s new state-of-the-art and proprietary operating system that is geared to provide the technical foundation that makes these online tools possible.
For more details, go to www.aulcorp.com.
Affordability continues to remain top-of-mind for most participants in and observers of the automotive industry. However, Experian explained consumers appear to be making due even as some industry pundits continue to be concerned that consumers can’t handle larger payments.
To reinforce its point that the data tells a different story, Experian released its Q2 2019 State of the Automotive Finance Market report on Thursday morning.
Analysts acknowledged consumers are exploring all available options to make costs more manageable, including extending contract terms and deciding between new or used vehicles.
Experian pointed out that one of the more notable ways consumers have managed to make their monthly payments more affordable is to opt for used vehicles. In fact, the report showed prime and super prime consumers financed used vehicles at record levels. Experian determined these borrowers comprised more than 57 percent of used vehicle financing during the second quarter.
“In previous years, it was common for most prime borrowers to opt for new vehicles. These vehicles tend to have better warranties and require less upfront maintenance,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions.
“But with loan amounts for new and used vehicles on the rise, and a higher volume of vehicles coming off-lease, there are late-model options available that borrowers can consider,” Zabritski continued in a news release.
“It’s important for the industry to keep an eye on these trends to help inform future business decisions,” she went on to say.
Experian also mentioned the shift to used vehicles comes as the average amounts financed continue to rise.
Based on the report, the average amount financed on a new-vehicle contract came in at $32,119, while the average amount for a used-vehicle deal hit $20,156.
Additionally, the average monthly payments were $550 and $392 for new and used, respectively.
Furthermore, the report showed consumers appear to be managing payments by extending contract terms. The average loan terms for new and used vehicles reached record highs.
For new vehicles, the average term came in at 69.17 months, while the average term was 64.82 months for used vehicles. The extension of terms come as interest rates continue to remain more than 6% for new vehicles and more than 10% for used.
“There are many factors that can impact vehicles costs and car-buying decisions, but —perhaps the factor that is most critical is a car shopper’s credit score — it can impact interest rates and loan terms, which impacts monthly payments,” Zabritski said.
“Prior to heading into the dealership, car shoppers should explore ways to improve their credit standing, such as leveraging new tools and resources available to them, like Experian Boost, that can help increase their score and potentially arrange better terms,” she continued.
Despite all of the elements in play, Experian pointed out that contract holders predominantly are maintaining their monthly commitments as delinquencies remained stable in Q2.
Analysts determined 30-day delinquencies dropped to 2.11 percent, from 2.12 percent in Q2 2018, while 60-day delinquencies saw a slight increase from 0.64 percent to 0.65 percent in the same time frame.
A few other additional findings for Q2 included:
—Outstanding automotive loan balances totaled $1.197 billion.
—The percentage of outstanding loan balances held by subprime and deep-subprime consumers saw slight growth YOY (from 18.81 percent in Q2 2018 to 18.95 percent in Q2 2019) but remained below 19 percent.
—New-vehicle leasing saw a slight decrease from 30.41 percent in Q2 2019 to 30.04 percent in Q2 2019.
—Credit scores saw a two-point increase for new vehicle financing (from 715 to 717) while used saw a 1-point increase (655 to 656) year-over-year.
—The average price difference in monthly payments between loans and leases is $92.
To watch a webinar when Experian experts plan to discuss the entire Q2 2019 State of the Automotive Finance Market report, visit this website.