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Unpacking Automotive Finance Purchasing Channels

In this second piece in our series of AFI articles, we look at the finance channel (i.e. who actually sells the finance to vehicle purchasers), and how this is changing over time. Click here to read the first piece, which explore the finance purchasing customer journey.

When it comes to automotive finance, banks have traditionally held the crown. This may however no longer be true, with the latest ACA Research Automotive Finance Insights (AFI) report revealing that dealerships can potentially now claim the top spot.

Despite (or potentially because of) the significant changes we’ve seen to dealership finance operations in recent years, there now appears to be a greater focus on finance as an additional profit centre for the business. As of 2021, nearly half (47%) of all vehicle financing is arranged in dealership, up from 34% in 2016.

Across the rest of the market, fewer customers are going directly to their main transaction bank, with around one in four choosing this option (down from 28% in 2016), around one in six sourcing finance directly from another lender, and the remainder either using a finance broker, or packaging the expense up as a novated lease. While the customer may still end up financing with a bank, they are becoming more reliant on their dealership relationships for origination.


One byproduct of this shift is the strong performance of captive finance providers, such as Toyota Financial Services (TFS) which is the leader amongst point-of-sale finance arranged through the dealership. Despite this, CBA still retains a strong share, leading the main bank category, while St. George stands out as the most commonly selected ‘secondary’ lender.

This lost opportunity for the major banks can be attributed to two main reasons: perceptions of higher costs, and the convenience/ease of financing through a dealership. This talks to the fundamental expectations of automotive finance purchasers, who are engaging in a significant life choice, and need the process to be as streamlined and pain free as possible. While these two reasons hold true regardless of the consumer decision making segment we’re looking at, there is a visible shift in their relative importance. Spontaneous consumers value the ease of purchasing finance through the dealership more prominently, with patient consumers (who have the time and inclination to fully work through their research) placing a greater emphasis on cost (believing that their main bank was more expensive than their chosen lender).


While these trends are clearly evident in 2022, we need to remember that many aspects of consumer behaviour are still in flux off the back of COVID. This emphasises the importance of businesses further investing in improvements to either lock in their increased share, or seek to regain lost opportunities. From a dealership perspective, they can continue to focus on delivering the ideal customer experience, particularly in the context of many brands shifting to or considering agency models. On the other hand, if banks wish to reclaim the top spot of being the preferred financial channel, they need to consider how to more effectively communicate the value of their finance offering to customers, while also well as streamlining the financing process to become more consumer friendly.

The 2022 AFI report is now available for purchase here. If you've got questions, or would like more information, you can click here to get in touch with our team of auto experts.

As always, feel free to add your thoughts in the comments below. We’d love to hear from you!

Topics: Market Research Automotive Research automotive trends automotive news