|By PR Newswire||
|November 8, 2012 08:03 AM EST||
- Offering loans with value-added services, such as free insurance or discounted repairs, will increase customer base
MOUNTAIN VIEW, California, Nov. 8, 2012 /PRNewswire/ -- Changing consumer patterns are galvanizing the automotive point-of-sale (POS) finance market in the United States. Easier access to information, increasing social connectivity and higher levels of awareness among consumers has led to a shift in demographics and behavior, as well as higher vehicle sales. To leverage this strong demand and maximize revenues, lenders are offering customized leasing terms for automobiles, rapidly broadening the scope of the POS finance market.
New analysis from Frost & Sullivan (http://www.automotive.frost.com), Strategic Analysis of the U.S. Automotive Point-of-sale Finance Market, finds that the market's annual lending value was $340.77 billion in 2011 and estimates this to reach $440.21 billion by 2018.
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Demand for used vehicles is nearly three to four times greater than that for new ones. While retail sales of new vehicles will increase from 10.2 million in 2011 to 13.3 million by 2018, sale of used automobiles will go up from 24.4 million to 31.7 million in the same timeframe.
"The rise in second-hand sales drives the automotive POS finance market, as 70 percent of used units sold are financed through loans," said Frost & Sullivan Senior Research Analyst Ratika Garg. "The higher average retail price of vehicles and the introduction of new in-car technologies also sustain dependence on dealership financing."
However, the average miles traveled will decrease at a compound annual growth rate (CAGR) of 0.25 percent between 2011 and 2018. This will boost vehicle longevity, reducing demand and curbing POS financing. Further, with consumers becoming more internet-savvy, online and smartphone applications for direct auto loans are growing popular.
As competition among POS as well as loan origination channels intensifies, a long-term view on loan servicing, customer engagement and retention models is crucial. Dealers need to establish a robust and engaging customer retention model to foster trust and drive top-line growth.
"Value-added finance products, such as loans with free insurance, rebates or discounted repairs, will attract and retain customers," concluded Garg. "Employing mobile and iPad applications to make vehicle purchase an enjoyable, social experience will also enhance consumer loyalty."
Strategic Analysis of the U.S. Automotive Point-of-sale Finance Market is part of the Automotive & Transportation Growth Partnership Services program, which also includes research in the following markets: 360 Degree Perspective on Commercial Vehicle Maintenance in North America, Opportunity Analysis of Selected Pumps in the North American Automotive Aftermarket, North American Fuel Systems CAFE Standards and their Impact on the Aftermarket, and North American Snow Chains Aftermarket. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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Strategic Analysis of the U.S. Automotive Point-of-sale Finance Market
Corporate Communications – North America
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