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car sales statistics
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This is an example of car sales statistics. This document is useful for studying car sales statistics.

Shared by: Pastor Gallo
Stats
views:
7788
posted:
8/4/2008
language:
English
pages:
38
Eurofinas & Leaseurope joint

annual conference

Antwerp 2006

David Betteley

October 2006

Point of sale motor finance-



challenges and opportunities

Toyota Financial Services in

Europe

Global Network …. Covers 90% of Total

Toyota Sales

Sweden 30 Locations Globally

Norway

Finland

Denmark (13 in Europe + 1 in South Africa)

Germany Poland

S Korea

Czech Rep. Canada

Slovakia U.S.A.

U.K. Hungary Japan

France Puerto Rico

Spain

★ China



Mexico

Taiwan

Italy

Thailand Brazil

Philippines Venezuela



Malaysia

Australia

New Zealand

S. Africa Argentina

TFS Europe & South Africa Locations

14 Countries Year Established



Germany (1988)

Finland (1995)

France (1997)

Italy (1997)

Norway (1997)

United Kingdom (1998)



Covering 75% of all

Czech Republic (2000)

Poland (2000)

Sweden (2000)

European Toyota Sales Denmark (2002) April

Hungary (2002) July

Spain (2003) May

Slovak Republic (2005) Jan

South Africa (2000)

Contents



• Industry dynamics



• Compliance



• Competitive changes



• Options to fight back

Challenging Environment in 2006

POS in decline: UK stats 1997-2005



POS new car penetration (%) POS used car penetration (%)



80



70



60



50



40



30



20



10



0

1997 1998 1999 2000 2001 2002 2003 2004 2005

Impact on Intermediaries (dealers):



•Direct impact today

•Shrinking/negative dealer new car margins

•Dealers dependent on F&I and bonus income

•Dealers need to maximise F&I profit (per customer), not

penetration



•Impact on POS

•Dealers maximising profit per finance customer at the

expense of volume

•Dealers selling at higher margins/rate spreads to fewer

customers

•Dealer finance perceived by customers as being expensive

•Declining finance penetration

Intermediaries are also under

threat from Compliance and

corporate restructuring:

Compliance



• Block Exemption



– CDA Strategy



– Larger dealer groups



– Brand



– Sales process



– Independent finance

Compliance (cont’d)



• Basel II Impacts:



– Lending linked to capital





– Banks may lose appetite for Motor Industry in general



• Credit crunch?



• Ration by price



• Increased demand for new wholesale lines



• Manufacturer finance companies (captives) lenders of last resort?

Compliance (cont’d)

• Insurance Mediation Directive (European)



– Car insurance, Creditor, GAP, Extended Warranty



– Brings dealers under the control of the FSA



– Introduce a rigid sales process



– All sales people need to be compliant



– May impact volume of sales and profits



– Ongoing training and education process required



Not embraced equally across Europe!

Compliance (cont’d)



• Consumer Credit Directive



– Export customer protection policies over Europe



– Attack on balloon products



– Introduce cooling off period



– Advertising parameters

Competitive Changes

POS in decline: UK stats 1997-2005



POS new car penetration (%) POS used car penetration (%)



80



70



60



50



40



30



20



10



0

1997 1998 1999 2000 2001 2002 2003 2004 2005

Reasons for POS decline – increasing

competition









Increase in direct marketing Convenience and Rate headlining by direct lenders POS

Growth in use of the internet speed Consumer perceptions of rates

Cost comparison with POS finance

POS finance perceived as expensive

Competitive Changes (cont’d)



• Convenience no longer the key driver:



2005 1999



Have an account 1 1





Lowest rate 2 3





Previous customer 3 4





Convenience 4 2





Source Datamonitor

Competitive Change: Average

Commission Paid by TFS per Contract



700





600

€ per Contract CY2005









500





400





300





200



100





0

Finland Germany Slovakia Poland Sweden Norway Hungary Czech Italy Denmark France Spain UK

Competitive Changes - Gross

Commission Paid by TFS CY 2005

140



120



100



80



60



40



20



0

Poland Slovakia Sweden Finland Norway Czech Spain France Denmark Germany Hungary Italy UK

€ 000's 2.766478 12.98885 33.68707 34.452 36.452 39.87979 40.1681 49.30769 52.47312 58.06028 63.62464 109.6935 130.267

Dealer departmental profit – 1994 and 2004

high volume dealerships

1994 2004

Direct profit Direct profit

£ % £ %

Vehicle sales 173,348 26.8 523,887 51.8

Of which - bonuses* (65,942) (10.2) (236,795) (23.4)

- F&I (64,635) (10.0) (289,857) (28.6)

Service & Repair (SMR) 177,015 27.4 294,143 29.1

Parts 139,486 21.6 140,612 13.9

Bodyshop 98,887 15.3 40,281 4.0

Other (rental, forecourt) 58,447 9.0 13,154 1.3



Bonuses and F&I income grows from 20% to over 52%

Total aftersales 415,388 64.2 475,036 46.9

Dealers losing money from Direct car sales in 2004 without bonus and F&I income!

Total franchise 647,184 100.0 1,012,077 100.0



* Volume and standards bonuses



Source: Dealer composites

Competitive Changes (Retention)



• Cost of ownership as dealers strive to maintain income from fewer

customers



• Leads to debt consolidation



• Loss of customer database – further erosion of retention

effectiveness



• Impact on Trade Cycle



• Negative impact on CS measures



• Inability to re-market used cars

Competitive Changes (cont’d)



In conclusion



• Declining income from F & I a

serious structural issue



• At the same time costs for

compliance are increasing



• What are the options?

What are the options?



• Give up?

• No of course not!

What are the options? (cont’d)



• Options to fight back using the sales process:



• Closer co-operation between Fin Co, dealer and distributor to fully

understand impact on TCM and CS



– Change of culture to more acceptable income levels per customer



– More use of packaged campaigns that have unique customer

advantages:



• Maintenance, insurance, extended warranty

The sales process and deciding how to pay:

At which point in the purchase process At which point in the purchase process

did you start thinking how you would did you make the final decision on how

pay for your car? you would pay for your car?









2%

3%

16% 26%







41%



55%

26%



31%



Before choosing the make / model After choosing the make / model

On the day of purchase Other/Dk/NS

The sales process and the ownership

cycle:





Purchase





Consideration Ownership









REPURCHASE



What & How Much?

What are the options? (cont’d)



• Captives can provide the Tools:



– Only have one customer



– Processes can support manufacturer campaigns

• TCM roll out



• Fleet solutions



• Used car brand and vehicle remarketing



– Retention



– Taking RV risk



– Developing e-banking

Customer Retention is the Key to

convincing the intermediary!







How do we reward our best customers?





Can we find a way to satisfy ALL our stakeholders?

TFS Europe & Africa Region





CRM – How captives can assist :



• End of contract process in most markets

• TFS needs to work with every distributor to integrate data and process

• TFS has more legitimate touchpoints :

– Pay every month

– Regular statements

– Balloon products / end of contract



• Introduce smart marketing :

• Pilot new CRM systems

• Integrated communication strategy (reduce communication fatigue)

Trade Cycle Management:



• Definition:

• TCM is much more than a finance product, it is complete purchase

solution designed to shorten the customer ownership cycle while

maximising CS

• Outputs:

• Specific SMART objectives: shorten customer buying cycle by 10% &

improve customer retention rates by 2.5%

• Boosts Brand efforts to maximize conquest customers

• Helps establish and maintain No. 1 ‘CCS’ performance

Why Complete Customer Satisfaction ?

CCS improves customer loyalty. Retention rates are significantly higher

amongst Complete Satisfied Customers (vs satisfied Customers)

70%

Satisfaction with previous car

60%

Loyalty is 1.5 times higher

50%

when customers are

40% completely satisfied

30% 40% 60%



20%

Fairly Very Completely

satisfied satisfied satisfied



Source: NCBS 2004, Toyota owners



Improved Customer Experience

> Integration of TFS and NMSC survey reduces “survey fatigue”

which can negatively influences customer satisfaction.

POS from the customers

perspective:

The sales process and deciding how to pay:

At which point in the purchase process At which point in the purchase process

did you start thinking how you would did you make the final decision on how

pay for your car? you would pay for your car?









2%

3%

16% 26%







41%



55%

26%



31%



Before choosing the make / model After choosing the make / model

On the day of purchase Other/Dk/NS

Did the dealer discuss alternative ways of

financing your purchase with you?

In a large number of cases, particularly 24% of all cash sales and over 39% of

personal loan sales, dealers failed to discuss alternative methods of finance.



Cash / savings Dealer finance Personal loan







Yes 30% 59% 47%







No 24% 38% 39%







No, but I made it clear from

33% 1% 10%

the outset I would pay cash



Yes, but I made it clear

from the outset that I would 13% 2% 3%

pay cash

Research findings summary



• Declining POS market – volume and value

• Increasing ‘low cost’ competition

• POS losing its traditional competitive advantages

• Wide variation in finance penetration among car dealers

• Influence of rates charged and effectiveness of sales process

• Retail car buyers perceive POS as expensive unless discounted

• Rising penetration of ‘cash’ and personal loans

• Method of finance generally decided upon before visiting the dealer

• Car buyers still believe they can get a discount for ‘cash’

• Overall impact – falling new and used car finance penetration

Conclusions:

• Financing decisions at the start of the process NOT the end!

• Develop dealer training programmes that work and can persuade

customers to buy POS

• Manage potential conflict with dealer income

• Develop products that provide the opportunity to sell add on products

Thank you


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