In the quest for new profits, captives have started to grow their business in two ways:
- Diversification of their product portfolio
- Expansion in emerging markets with a high growth potential.
Both strategies open up new perspectives and growth areas, but also bring an array of new challenges.
| The next phases of the finance and leasing industry’s growth |
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Diversification of product portfolio – Green technologies and mobility services
Technological development of hybrid and electric vehicles enable captives to come up with new specialized services tailored to the changing needs and preferences of customers.
Green technologies
 |
- Technological innovation
- Population growth
- Urbanisation
- Congestion
- Environmental concerns
- Total cost of ownership
|
 |
 |
"Green”
technologies |
- Hybrid vehicles
- Electric vehicles
|
New mobility
solutions |
- Car-sharing
- Multi-mode mobility
|
| Finance & leasing business support green technologies |
| CHALLENGE |
RESIDUAL VALUE OF ELECTRIC VEHICLES
- Dependent on lifetime of the battery
- Uncertain technology development
- Little empirical estimation
|
PROMOTING GREEN MOBILTY IN FLEET BUSINESS
- Pressure for greater corporate social responsibility
- Huge difference in the emergence of green fleets in particular in the emerging markets where the topic is not very prominent
|
| SOLUTION |
BATTERY LEASING
- Separate battery from the car
- Sell car through common finance/ leasing contract
- Additional leasing contract for battery
|
FOCUS ON FLEET CUSTOMERS
- Special offers for companies that integrate hybrid and electric vehicles in their fleet
- Promote corporate social responsibility aspects of a “green” company fleet
|
| EXAMPLE |
Renault with electric car “Twizy”
- Car purchase and separate battery leasing
- Electric two-seater is available from EUR 6,990, plus a monthly leasing fee of EUR 50 for the integrated battery
|
Green” Fleet incentives
- EcoStar” program by Daimler
- “Green Fleet” Award by Volkswagen FS with driving training for employees on how to drive in an eco-friendly manner
|
Mobility Solutions
| New mobility solutions |
|
- Car-sharing
- Multi- mode mobility
|
| Finance & leasing business support new mobility solutions |
| CHALLENGE |
CHANGING CUSTOMER BEHAVIOUR
- Moving from car ownership to car usage
- Flexible usage of cars
|
NEW HOLISITC MOBILITY APPOROACH
- Combining multi-mode transportation
- Customers switching between different mobility providers
- More variable revenue streams
|
| SOLUTION |
CAR-SHARING FLEETS
- Reduction of fixed costs due to the cost allocation to all parties
- Allowing short inner city trips for car-sharing members
- Customers getting familiar with electric vehicles
|
NEW MOBILITY PRODUCTS
- New pricing models:
- Pay – per – use
- All inclusive flat rate
- Ensure customer loyalty through contract structure
|
| EXAMPLE |
Car-sharing fleets:
- DriveNow of BMW
- Car2Go of Daimler
- Quicar of Volkswagen
- Mü by Peugeot
|
BeMobilty – a cooperation of various industry partners:
- Usage of public transportation, electric car fleet and bikes
- Paying one monthly flat rate
|
Diversification of product portfolio – Banking services
Retail banking increasingly becomes a common business activity of captives, especially in Europe where most captives hold a full bank license.
| Captives grow their business through retail banking activities |
Main banking products
Credit
cards |
|
Customer
deposits |
|
Commercial
papers |
Opportunities of banking business |
|
Threats of banking business |
| Low-cost funding |
- Customer deposits as a source of low-cost funding
- More independent from commercial banks
- Can offer better rates to customers
|
|
Regulations |
- Banking license subjects captives to regulations of local and international banking authorities
- Stricter requirements: capital ratio, internal lending, underwriting, reporting, and internal control
|
| Customer loyalty |
- Increase customer loyalty through credit cards and deposits as they serve as an additional touch point
- Acquisition of new customers through deposits
|
|
Emerging markets |
- Market entry in banking sector usually restricted to commercial banks
- If not, license approval can take several years
|
| Source of revenue |
- Cross-selling F&L products to banking customers
|
|
Increased risk |
- Negative impact on main brand due to poor execution of banking business
|
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