Slowing vehicle sales and the potential for a market downturn have lit a spark among lenders, technology companies, and OEMs, igniting partnerships aimed at gaining marketshare and creating solutions attainable only by way of collaboration.
In January, Ford Motor Co. and Volkswagen AG established an alliance that will likely spur the OEMs’ captives to collaborate on financing. On Feb. 7, news broke that BB&T Bank and SunTrust Banks planned to combine operations — a merger that would create a $22.8 billion auto finance business. Later that month, Daimler AG and BMW Group invested $1.1 billion in a mobility and ride-hailing joint venture, while Volvo Financial Services launched its inaugural innovation lab, iLabX, realizing the once competitive auto finance business was now better suited to collaboration.
“All these hugely expensive infrastructural overhauls are [lenders] attempting to split the costs to become more nimble and agile for what’s going to be leaner times than we’ve seen for close to a decade now,” said Jeremy Acevedo, Edmunds‘ manager of industry analysis.
Partnerships between industry giants and technology companies are becoming more prevalent, a trend expected to continue, Acevedo said. In fact, collaboration serves as a missing ingredient to help ensure auto lenders are able to increase profit margins, effectively manage technology disruptors, and stay ahead of a potential downturn.
“Competitive lines [in auto finance] have been in place for a very long time,” said Allen Atchley, vice president of global strategy and head of innovation at Volvo Financial Services. “[Lenders] have more open doors today.”
