Captive auto finance


A digital future for the captive auto finance industry

Auto finance transformation in the wake of a global pandemic  

The COVID-19 pandemic not only sped up the timetable for digital adoption in the captive auto finance industry, but also changed its focus. Learn where the industry is headed and how companies can use innovative digital platforms and tools to serve shifting customer needs.

The captive auto industry is shifting gears

Before COVID-19, captive auto finance industry leaders were actively looking to expand beyond traditional revenue sources such as individual vehicle loans and leases, dealer and commercial lending, and white-label insurance products. Many of them were also eyeing opportunities to use innovative digital platforms and tools to serve customers’ broader financial needs.

Now, as customer needs continue to shift in response to the COVID-19 pandemic, those opportunities are no longer nice-to-haves, but must-haves. Captive finance leaders today have an urgent interest in offering their customers seamless digital services that combine shopping, purchasing, and financing a vehicle into a single, seamless experience. To do this, they need to look past digital as a simple overlay on their existing structure and instead regard it as a new strategic and operational identity.

So, how can your captive finance company respond to the accelerated need for digital auto finance transformation?

Captive auto finance companies need to embrace a digital-first mindset that looks beyond internal divisions, external boundaries, and old assumptions about who does what and where in favor of a holistic, operational strategy focused on driving value directly to the consumer. And since digital captives’ future value propositions are likely to extend beyond traditional vehicle loan and lease offerings, it will be helpful to consider some ways their companies could digitally transform to explore future avenues.

The disruptions brought on by the global pandemic have had the unintended effect of increasing captives’ flexibility in many ways. While nurturing and managing customer relationships digitally requires not only new tools, channels, and the ability to span geographies on a 24/7 basis, it also creates an opportunity to improve competencies—regardless of location. For example, when financing decisions happened at a dealership desk once every several years, that dictated when and where business could take place. Now, as more people demand contactless, “always-on” service across an expanded spectrum of offerings, that opens the door to regionalize service centers or even to move some operations across borders. Competencies in one place can enhance customer value everywhere the company has customers.

Digital by design

Charting a path forward

Captives will likely need to determine their level of ambition in order to chart their strategic growth path. As prospective digital captives consider their future in an expanded financial services landscape, it is important to keep two things in mind:

  1. Every potential path forward presents advantages and disadvantages
  2. Each digital captive will start in a different place based on its brand equity, assets, risk tolerance, and strategic vision

The need for change in the captive auto finance industry was evident long before the pandemic derailed global markets. Now, these changes are happening against a backdrop of several other shifts occurring at the very heart of mobility and vehicle ownership—all of which are also influenced by COVID-19.

What’s become clear is that the future of captive auto financing is digital—and it is digital by design. Read our full report to learn how the auto finance sector can transform to fit the post–COVID-19 consumer landscape and remain competitive in our ever-evolving world.

Potential auto captive offerings in the future of mobility

Get in touch

Karen P. Bowman
Deloitte & Touche LLP
+1 212 436 3640
Robert Shaw
Managing director
Deloitte Consulting LLP
+1 469 479 9291
Jeff Paul
Managing director
Deloitte Services LP
+1 770 329 9609
Jake Werner
Senior manager
Deloitte Consulting LLP
+1 347 281 1444

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