Automakers in China are starting to focus more on customer retention through their captives as sales may be nearing a peak, George Leondis, president of Dongfeng Nissan Auto Finance Co., said during a presentation at the Auto Finance Summit Asia.
The industry sold nearly 24 million new vehicles last year in China, and several speakers at the conference questioned how much higher that number can climb. Increasingly, sales will have to turn to used units and leasing, which requires more captive involvement.
“In the U.S., I can tell you every second day a Nissan Finance customer is getting a letter that includes an offer from Nissan about a new car that’s launched and a loan — this is not happening here in China,” Leondis said. “Nissan has 10 million customers in China, I have less than that who have actually financed, but I know more about their customer than the manufacturer does. Together we have a huge opportunity to manage this customer through the lifecycle.”
Another opportunity he highlighted for lenders is lengthening loan terms in China. The average loan length in China is about 25 months compared to 48 months in the U.S. Not to mention, lenders can go much higher to six or seven years.
“What a big opportunity we have to extend that,” he said, adding that longer terms would also help raise funding.
“[We] raise money at about the same origination cost as a finance company in the U.S., but my general manager of finance has to amortized this over 25 months or less actually because the ABS life is a weighted average life of one year,” Leondis said. “In the U.S. they can amortize it over three to four years.”
Dongfeng Nissan Auto Finance issued a $72 million securitization this week backed by 87,240 loans, according to a Moody’s pre-sale report released today.
