LAS VEGAS – Electric vehicle financing, digital payment solutions and risk management are the top areas of “opportunity” for auto financiers to better collaborate with their OEM partners, said Joy Falotico, president of The Lincoln Motor Company and chief marketing officer at Ford Motor Co. during AFSA’s Vehicle Finance Conference this week.
“Financing is not only important, it’s imperative,” Falotico said, noting more than 80% of vehicles are financed or leased. “There is an opportunity for the finance company to help in areas such as [financing] battery electric vehicles. How can [EVs] fit into your portfolio?”
Despite battery electric vehicle sales consisting of just 2% of the 17.1 million new vehicles sold in 2019, according to Edmunds, Ford is urging lenders to keep the potential rise of EV sales on their radar. “Right now [EV] volume is low,” Falotico said. “But what happens when we get to that takeoff point and it becomes 30% or 40% of the business?”
Further, Falotico noted that digital payment solutions are an area that OEMs are looking to their lender partners for advancement.
“Digital payments are huge,” she said. “It helps with customer loyalty and creates this opportunity to go further and improve the [customer] experience.”
Finally, Ford is bullish on “continuing the disciplines of arm’s length communication between the OEM and lender, especially in areas like risk management,” Falotico said. “We all know how important it is for the manufacturer and [lender] to [work as] partners, but diligence is something people take for granted.”
“That’s what I would say to finance executives: Look into how to solve some of those problems and speed up processes,” Falotico continued. “Then help [OEMs] figure out new funding solutions for what’s ahead, whether it’s battery electric vehicles or whatever the innovation.”
Last week, Ford’s captive Ford Credit closed out 2019 with $3 billion in earnings before taxes, a 14% year-over-year increase and best result in nine years, Tim Stone, chief financial officer of Ford Motor Co., said during the company’s fourth-quarter earnings call.
Shares of Ford (NYSE: F) were trading down 1.09% to $8.16 per share at press time. Ford has a market capitalization of $32.5 billion.