Luxembourg

Details

  • Date: 10/1/2012

Contact

Louis Thomas

Luxembourg Automotive Leader

Tel. +352 22 51 51 - 5527

louis.thomas@kpmg.lu

 

Fabrice Leonardi

Partner

Tel. +352 22 51 51 - 6313

fabrice.leonardi@kpmg.lu

 

Bruno Magal

Manager

Tel. +352 22 51 51 - 7259

bruno.magal@kpmg.lu

KPMG’s Global automotive finance and leasing 

The role of product diversification and emerging markets in future growth

 

New business models are essential for the future growth of global automotive manufacturers. Captives and their offerings provide new and stable revenue streams for OEMs which go beyond pure car sales. KPMG’s new report, Global automotive finance and leasing: The role of product diversification and emerging markets in future growth examines the current state and winning strategies of the global finance and leasing market, including a comprehensive assessment of the key markets - the US, Western Europe, China, India, and Russia.

Executive summary Executive summary: Key findings
Captives have started to grow their business through product diversification into new mobility and banking related activities and expanding into emerging markets with high growth potential.
Current state Current state of the finance and leasing market
The performance of the finance and leasing business is clearly linked to the state of the automotive market as well as to the banking and finance sector. If financial markets and car sales improve, the outlook for the finance and leasing business is quite positive. Despite a positive global outlook it should not be noted that the current financial crisis, especially in Southern Europe, might also influence the finance and lease business.
Product diversification Product diversification - Setting the stage for continued growth
The ongoing changes in the automotive business model towards electrification, coupled with an increasing demand for mobility solutions such as car-sharing, and the saturation of Western markets, means that captives have to develop new markets. In the quest for new profits, captives have started to grow their business in two ways:
  1. Diversification of their product portfolio
  2. 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.
Emerging markets expansion Emerging markets expansion - Setting the stage for continued growth
The expansion plans of captives are clearly linked to their OEM’s growth plans as both businesses depend on each other. Most OEMs have already successfully built up their traditional car business in the emerging markets, whereas the finance and lease business remains virtually untapped. OEMs continue to capture those markets as well and generate new profits.
Around the world Automotive finance and leasing around the world
An overview of the current state of markets around the world summarizes the finance and leasing situation in the US, Western Europe, China, India and Russia, in terms of the following key features: market structure, business environment, business characteristics and business prospects.
Finance and leasing - US Finance and leasing landscape: US
The US is a mature and highly fragmented market, where the automotive market recovery will continue to drive financing growth. Captives dominate the new car market and banks own the largest share of the used car financing market. The greatest opportunities in this market lie in the development of new mobility services and the expansion of banking services through a full banking license.
Finance and leasing - Western Europe Finance and leasing landscape: Western Europe
Western Europe is a highly competitive and cluttered market where captives dominate. With cars sales expected to increase modestly, the growth in this market is expected to come from additional banking services, new mobility services and insurance offerings.
Finance and leasing - China Finance and leasing landscape: China
China’s growing economy and car market translates into a significant opportunity in the automotive finance and leasing business. The opportunities in this market are for the early entry leaders to widen service and insurance offerings and to be poised as consumer habits change and business opportunities open up.
Finance and leasing - India Finance and leasing landscape: India
India is a fragmented market with a high potential for automotive and finance and leasing sales growth. Car financing is well accepted in this underdeveloped market and there is an opportunity here to introduce basic finance and leasing products and to invest in the “green agenda”.
Finance and leasing - Russia Finance and leasing landscape: Russia
There are opportunities in Russia as the economy rebounds, car sales rise and consumers income and acceptance of financing improves. Finance and leasing companies can prosper by expanding their financing offerings, introducing basic banking products and improving the service networks and fleet services.
 

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About the study

Global automotive finance and leasing: The role of product diversification and emerging markets in future growth is based on desk research and in-depth interviews with senior executives representing key leasing and financing participants including banks, captives and independent auto leasing and financing organizations from China, France, Germany, India, Japan, Russia and the UK.