I recently spent three days at the Auto Finance Summit (AFS), a conference attended by thousands of the industry’s most innovative companies and brightest executives. Over the course of the conference, I sat in on many educational sessions and had countless conversations with fellow auto finance industry executives. All in all, it was a great three days that reaffirmed my bullish attitude toward the future of the industry.
However, just like any industry, auto finance is not immune to challenges or uncertainty. I was fortunate to spend these three days talking to so many industry leaders and hearing what is on their minds.
Here is a summary of the most common topics I observed being discussed throughout the conference:
Delinquencies Remain A Concern: Given recent increased mainstream media attention, it’s not surprising that rising delinquencies—especially within the subprime market—were on the minds of many. With TransUnion reporting that the percentage of auto loans that are 60-days or more delinquent are at the highest levels in more than a decade, it’s clear that this is an issue that the auto finance industry will have to continue to address. However, despite this inarguable increase in delinquencies, I enjoyed speaking to so many like-minded executives who share my and Servicing Solutions’ belief that a proactive approach to collections based on communication, flexibility, and customer respect is the best path toward bringing these rates down.
Pricing (especially in the Used Car market): Manheim’s Used Vehicle Index revealed that prices have dropped by 15% over the past nine months, the largest decrease since 2008. This lines up with many of the discussions I had at AFS about pricing finally showing signs of stabilization after the much-publicized increases in previous months. However, pricing will continue to be a front-of-mind issue in the industry as we move forward. Jonathan Smoke, Chief Economist at Cox Automotive, sums up the continued challenges well:
“Even though used prices have come down some this year, it is still difficult to find a used vehicle without substantial mileage or maintenance concerns that would produce an affordable payment without other expense challenges.”
With this in mind, auto lenders will need to continue to work diligently to create financing options that won’t slow sales but are responsible and in the best interest of both the consumer and the health of loan portfolios.
Compliance: AFS featured an entire breakout session on the topic of compliance, and for good reason. This has always been at the forefront of a successful auto lending operation, but with new types of financing being introduced regularly by fintechs and banks alike, regulatory compliance is far more complex and fluid than at any time in history, in my opinion. Regulatory agencies at the federal and state level have taken note of this complexity and have been clear that they intend to ramp up oversight.
Customer Experience: As a 20-plus-year veteran in loan servicing and customer care, one of the most interesting sessions was presented by executives from industry heavyweights such as US Bank, CarMax, and GM Financial. The session focused on creating a better omnichannel financing experience, one that meets customers at key touchpoints in the financing process to create a personalized experience. It also discussed how technology can and should be used to present compelling, personalized, and accurate offers to potential borrowers.
I couldn’t agree more, as our entire approach to the customer experience is based on building it from the outside in to align with customer preferences and create a one-of-a-kind and personalized experience for each and every customer.
Ready to Invest In Real Experience to deal with industry uncertainty head-on and improve the performance of your auto portfolio? We’d love to talk. Drop us a line at firstname.lastname@example.org .