Auto finance firms ought to refine the business model to center their focus on selling high-margin products and services. Data analysis can assist them in emphasizing application rather than depreciation.
FREMONT, CA: Even before COVID-19 hit, conventional auto financing volumes were set to drop by 30 percent in ten years. Currently, auto financiers are under even more burden. Artificial Intelligence (AI) can certainly be a game-changer for the sector, helping it circumnavigate the crisis and build flexibility for the future. But first, auto financiers need to embrace it fully.
AI is both an opportunity and a challenge for the auto finance trade. With AI, one can predict what supplementary services customers want, and when they want them. Businesses can make credit decisions frictionless and make driving more comfortable and safer. They also have the advantage of having access to both the consumer data and the assets that generate information.
How Can the Industry Transform?
So how can the industry change overcome its sluggishness and structural inefficiencies? Below are three key ways to achieve it:
Adapt–Auto finance firms ought to refine the business model to center their focus on selling high-margin products and services. Data analysis can assist them in emphasizing application rather than depreciation. This occurrence will involve adopting AI to hone strategies that incentivize co-ownership.
Connect–As an industry, one does not have the expertise to do this alone. Thus, firms must connect with those players that recognize how to apply AI across the entire lifecycle of the asset and customer relationship, which implies partnerships being the key. Captives will score to gain scale and administer the customer on behalf of the OEM.
Predict–The industry should employ AI and its dynamic algorithms to forecast customer requirements and behaviors. The customer will then become the center of a far more practical, operational, and significant experience.
The auto finance sector does not have long to take advantage of the native gain in connectivity, electrification, automation, and servitization. It must transform or watch big technology to get through to kill.