Latest automotive industry research reveals that the aggressive finance offers provided by automotive manufacturers and dealerships has resulted in a significant increase in car buyers organising vehicle finance through dealerships since 2011.
In the latest edition of the research report, Automotive Finance Insight, it is noticeable that 40% of consumers purchasing automotive finance now use the dealership channel rather than their bank or other financier to organise their finance. This is up 13% from 27% since the last report was published in 2011.
In a highly competitive market, it is very difficult for dealers to make a profit from vehicle sales. Accordingly, the finance and insurance arm of the business has become very important. Manufacturers and dealers have become much savvier about using finance in their sales and marketing process to both attract and convert customers.
ACA Research surveyed 815 consumers that have bought vehicle finance since 2011. The sample included new and used car buyers throughout Australia across a variety of vehicle brands and price ranges.
The research indicates that 46% (up from 41% in 2011) of consumers buying vehicles are using some type of finance to pay for their vehicles and that consumers buying vehicles valued from $10,000 - $30,000 are now considerably more likely to use finance than in previous years.
Increasingly, consumers are being lured into the dealership by offers of drive away packages including finance and capped price servicing. These are compelling offers for many consumers, as it takes the guess work out of vehicle ownership.
In the current environment the combination of great value cars and low interest rates provides consumers a fantastic opportunity to upgrade their vehicles and to lock in low cost finance.
In a highly fragmented market, the finance companies that have gained most market share as a result of the increased use of dealership finance are Esanda, St George, Toyota Financial Services and Nissan Finance.
But is it not only price that is driving consumers to purchase finance from the dealerships, with many choosing the dealership channel, believing that the application and approval process is faster than it is with the banks.
Some of the key findings from the research are:
- The use of finance for vehicle purchases has increased from 41% to 46% since 2011.
- The car and finance path to purchase takes about 10 weeks.
- Many consumers will consider finance early in the car buying process, but many will leave the finance decision until they have chosen the vehicle.
- Consumers rely on websites and dealerships when searching for finance.
- 25% of applications are completed online.
- 35% obtain pre-approved finance prior to finalising vehicle choice.
- 80% of dealership customers are offered finance at some stage during the vehicle sales process.
- The top three lenders of automotive finance hold 30% of the market.
Automotive Finance Insight is available in a comprehensive 170 slide report that clearly articulates the customer journey and how manufacturers, dealerships, banks and other financiers can maximise the finance opportunity.
To download your free summary of the findings click here.
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