An almost flat sales environment next year could force captives to become more creative in order to hold onto high penetration rates, Larry Dominique, president of Automotive Lease Guide, told Auto Finance News. “If sales only go up a half a million units, who’s going to gain and who’s going to lose share in that environment?” Dominique asked.
He predicts that because captives are such important contributors to their manufacturers’ bottom line, they are going to be under pressure to continue to produce a high number of profitable contracts on a monthly basis.
“I think it’s going to be really interesting to see if the captives get innovative in trying to keep those high penetration rates,” Dominique said. The challenge comes at a time when banks are becoming more hungry for volume too. “From talking to banks, I think Chase is becoming very aggressive in wanting to do more indirect and direct [auto lending],” he said. “I think Wells Fargo is starting to get back in the business heavier than they were before, so there’s going to be more competition for the captives, for sure.”
