Automotive News - March 10, 2008 - (Page 20)

20 • MARCH 10, 2008 finance & insurance Toyota Financial takes risks to aid dealers Announcing! Toyota Financial Services, the captive finance company of Toyota Motor Sales U.S.A. Inc., is increasing its market share even as the credit crunch worsens and other lenders cut back on vehicle loans. At last month’s National Automobile Dealers Association convention in San Francisco, Toyota Financial CEO George Borst discussed with Staff Reporter Donna Harris the company’s efforts to help Toyota dealers in a tough economy. One example: 84-month loans. What is your market share? Toyota Financial Services has increased its market share ahead of the company’s projections. Our share of new Toyotas financed and leased was 49 percent in 2007, up from 48 percent in fiscal 2006. In January 2008, the company’s market share soared past 50 percent. When you take out large fleets and cash buyers, our market share was 77 percent. In 10 years, we increased our asset size from $20 billion to $75 billion. bureau score. It helps people get better rates, and it has made our dealers more competitive. How competitive is your inventory financing? Ten years ago, 33 percent of Toyota dealers had floorplan financing with Toyota Financial Services. Today, that number is 64 percent. We have gone after that business. We are competitive on rate and flexible on terms. We give dealers who floorplan with us a buy rate of 25 basis points less than for dealers who don’t floorplan with us. The second major step was that we financed other makes besides Toyotas (for Toyota dealers who sell other brands). You began offering 84-month car loans last fall, in response to competition from banks and credit unions. What percentage of your business is that? Since we got into that market, 84month loans are now 4 percent of our business. Our model is to create loyalty — to get people into the Toyota family, where they can get a monthly statement with a message promoting the dealer. Some people question the wisdom of seven-year car loans, because they keep customers out of the car market longer. We only offer the loans to our tier one customers, people with a good credit history. We don’t promote it. It is just a tool that is there if the dealer needs it. We did not blindly go into the 84month segment. It’s trouble waiting to happen. But if you selectively go after that business, you can support the dealer in a difficult time. c Q&A GE Money - Warranty Services is now part of Wachovia Dealer Services How critical is used-vehicle financing as new-vehicle sales soften? It’s really important. If you have a stake in the leasing market, you have off-lease cars coming back, and you have to ask dealers to purchase those vehicles. We have to be able to help them sell the vehicles. What are you doing to help dealers sell certified vehicles? We started a pre-owned program in which certified vehicles can get the same (wholesale interest) rate as a new vehicle. Usually the interest on a Toyota Financial Services CEO George Borst: “We’re here in the good times and the bad times. We have a very consistent purchase policy.” used-vehicle loan is one or two points higher than on a new-vehicle loan. How else are you helping dealers move vehicles? A difficult time like this is an opportunity for Toyota to reinforce the value story with our dealers. We’re here in the good times and the bad times. We have a very consistent purchase policy. We also revised our credit tiers. People who would have been in tier two would now be in tier one. When a person gets moved up a tier, that can be a difference of one point. They get a better rate as a result. We also check three credit bureaus instead of one, and we take the best Together we offer a comprehensive suite of F&I after-market products, retail financing and commercial services, providing end-to-end solutions for the financial needs of your customers1. Credit unions’ share of auto loans declines RANCHO CUCAMONGA, Calif. — Credit unions’ share of U.S. auto lending declined to 16.9 percent last year from 18.0 percent in 2006, a new report says. Credit Union Direct Lending, an online finance network of credit unions that works with auto dealers, compiled the report. Two other groups of lenders — banks and captive finance companies affiliated with automakers — also lost market share in 2007, the report says. The report says that independent finance companies increased market share by boosting lending to subprime customers. Independent finance companies’ share of auto retail loans rose to 25.3 percent from 22.5 percent. The captives’ share dipped to 25.2 percent. Banks remain on top, but their market share fell to 32.6 percent last year from 34.2 percent in 2006. ADP develops e-sales brochure CHICAGO — ADP Dealer Services is completing a brochure aimed at promoting online vehicle sales, says Paul Rindone, the computer vendor’s vice president of financial services. The brochure will be available soon, he says, although he declined to give a timetable. ADP will ask its auto dealer clients to distribute the brochure to their retail customers. “The brochure will explain why it is helpful to provide credit information on dealers’ Web sites,” Rindone says. “Dealers can get back to customers in a timely way with more exact pricing.” Honda captive beefs up dealer training in leasing Donna Harris dharris@crain.com For more information please visit www.geaws.com or call 800-828-1392. NADA releases 2 subprime guides McLEAN, Va. — The National Automobile Dealers Association is offering dealers two guides focusing on subprime borrowers. A DVD called “Creating a Special Finance Operation: Doing it Right” sells for $169. A management guide called “A Dealer Guide to Building a Special Finance Department” sells for $25. 1 Commercial banking products and services are provided by Wachovia Bank, N.A., Member FDIC and Equal Credit Opportunity Lender. Wachovia Dealer Services, Inc., is a wholly owned subsidiary of Wachovia Bank, N.A. GE Money - Warranty Services is a subsidiary of Wachovia Corporation. ©2008 Wachovia Corporation SAN FRANCISCO — American Honda Finance Corp. is increasing its dealership training program aimed at promoting consumer leasing of new Honda and Acura vehicles, CEO Stephen Smith said. At an industry conference here last month, Smith said leasing offers an opportunity for Honda brands and their dealers. Strong residual values of Honda and Acura cars and trucks enable the finance company to keep monthly lease payments low, he said. During a panel discussion at the annual auto finance conference of the American Financial Services Association, Smith did not say what percentage of new Honda and Acura vehicles are leased, nor did he state a target volume. A Honda spokesman declined to disclose company figures on leasing. Last year, 18.2 percent of retailed Honda-brand vehicles were leased, according to Power Informa- American Honda Finance CEO Stephen Smith: “Dealerships are not well-educated on leasing.” tion Network. In the first two months of 2008, Power says, the brand’s lease penetration rate was 23.1 percent. Smith did not offer details about the training program, but he said consumers often know more about leasing than dealers do. “We made our lease more consumer-friendly,” Smith said. “We’ve learned how to manage off-lease vehicles. Consumers are educated on leasing. “The challenge is, dealerships are not well-educated on leasing.” Added Smith: “Leasing makes more sense than an 84-month finance contract.” c http://www.geaws.com http://www.geaws.com

Table of Contents Feed for the Digital Edition of Automotive News - March 10, 2008

Cheaper small cars are part of VW's U.S. plan Ford offers to buy back 81 stores As dollar dives, automakers juggle global strategies Jaguar-Land Rover deal will be signed within weeks GM Planworks chief leaves Jacoby cites dealer role in VW makeover Slim fast Nissan: Electric car to get here in 2010 Family honor Suddenly, Arkona's a key software player Chrysler may build vehicles in Russia Congress may ban mandated arbitration Volvo signs dealers willing to exit Breeding a hybrid? Prius could be a brand Honda adds benefits for same-sex partners Top China execs to speak at conference Manual for Challenger waits until '09 Ex-Sonic president: Gulf States raided Sonic GM, American Axle: Ties that bind Boardroom coup ousts Chamco executives False data imperil all auto financing Dealers would suffer if Calif. gets its way GM, Ford should bring Euro cars here Fresh ideas are fine, but Chrysler must be wary We need that 10% of useful inventions Safety options: Let consumers decide Tire monitors are full of problems Germany's labor setup just doesn't work Alabama adding auto jobs more slowly Engineer Banks strives to sip fuel, burn rubber Toyota Financial takes risks to aid dealers Honda captive beefs up dealer training in leasing NADA releases 2 subprime guides ADP develops e-sales brochure Credit unions' share of auto loans declines Upgraded auction ID carries a fee Dealers At hard-charging Hyundai, the plan is simple: More — now Genesis sedan's assignment: Boost image of all Hyundais Allied will supply sensing systems to Magna Haldex opens Mexico plant Behr gets Nano pact How Tupelo talked Toyota into building a plant there Infiniti FX showcases new Nissan technology Ford may consider hatchback for U.S. Audi to launch A4 sedan, wagon together BMW M3 convertible Saab hybrid concept has solar roof panels Toyota could bring tiny 4-seater to U.S. Hummer to push H3 pickup's usefulness New look for the SL Tiny Nano makes big waves GM's Opel unveils small hatchback that could become part of Saturn line Who says Americans don't want hatchbacks? 9-3 will dominate Saab marketing Lutz: Green takes greenbacks Leap year added to Feb. misery 9 U.S. Toyota executives will retire Ford gives employees $1,000 bonus Denso picks new N.A. CEO GM extends buyout offers CAW OKs TRW pact Lampert ups AutoNation stake Sagging Chrysler boosts spiffs Feb. output is up slightly Buick offers the Cadillac of caddies GM's board: The royal robe fits Fritz Be it metal or men, Geneva all about style Raising the roof (price) Italian cops bust Fiero-aris Consumer Reports' verdict on Chrysler products: Eeeee-uuw!

Automotive News - March 10, 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.