Branching Out
This year is poised to be a turning point for the sector, Acevedo said. “If you look at where the industry was in 2015 and 2016, it was a historically rich time for vehicle sales — cruising above 17 million units sold in back-to-back years,” he said. “That rich time for the industry is concluding.”
Today, lenders have less access to cheap and accessible credit to sustain sales — a critical piece of post-recession success for the industry, he said.
On top of that, the economy is at a time where there “should be a recession,” said Western Funding’s president Jim Murray. “We are at the point of contraction, and that creates an opportunity,” he added.
That opportunity is the ability to partner with smaller fintechs. “The banks are thinking, ‘I want to be able to serve all customers,’ so they bring on a fintech” to provide that service, he said.
Acevedo, too, expects “a lot more partnerships” on both big and small scales. “I think it’ll go up from here,” he said.
“Technology is always the great equalizer, and when it hits your industry, you have to make these moves,” Acevedo said. “It’s such a huge disruptor, and if you don’t adapt and forge these kinds of partnerships to split some of the cost — that eventually catches up with you.”
BMW Financial Services, for one, is currently working with artificial intelligence platform CarLabs, on a new product, which is slated to launch in July. CarLabs was one of six startups involved in BMW Financial’s innovation lab aimed at exploring new technology and solutions for both the captive’s customer base and its business. The tech company was one of the startups chosen to continue its work with the captive, Martin Schmitt, CarLabs chief executive, told Auto Finance News.
“[CarLabs] is working on the second phase of the finance assistant for BMW Financial,” Schmitt said. “After a user logs in [to the captive’s] website, an AI-powered system will vet the most common payment-related questions, and then automate referrals to the appropriate call center.”