The rideshare market is “a global opportunity, but the [right] products don’t exist today,” at least not through traditional OEMs and captives, Chris Ballinger, senior vice president and chief financial officer for Toyota Financial Services and chief officer of strategic innovation, told Auto Finance News.
The product model needs to solve two problems: residual value and credit risk, according to Ballinger. A car used for ridesharing “is going to have much higher mileage than a traditional contract and a fast depreciation,” he said. The model also needs to manage credit risk to “find other ways of securing the payment, perhaps using that income stream to pay the retail of these contracts.”
“Every captive is looking at partnering with players in this emerging [mobility] market,” Ballinger said. Small fintech companies and startups want to partner with the OEMs and captives “because we can give them things they need, and they can give us things we need,” he said. “From startups, we can get technology, speed, and expertise in certain applications — or perhaps the reputational advantage of looking more nimble and quick. From us, they can get access to what they need, which is customers and scale.”
There’s also “huge opportunity for captives in the new pay-per-use models and applications,” Ballinger said. “Ridesharing, car-sharing, ‘last mile’ delivery — all of these are mobility in a broader sense, but are different than the traditional model we finance. It’s financing a car for someone who wants to monetize it and turn it into an income-rising asset. The trick is to develop new finance models.”
At the end of day, companies don’t want to use their balance sheet and capital to create these product models, Ballinger said. “The big picture is that rideshare is a pay-per-usage model, it depends on the monetization of information, it depends on location, identity, ability to make small payments. At least the latter two are things finance companies have been good at,” he added.
