In addition to a product that “sets itself apart,” commercial auto lenders must focus on service rather than pricing, a pair of VW Credit Inc. execs told Auto Finance News.
“Customer satisfaction is key, and full-service is the real issue,” said Patrick Russell, the captive’s senior manager of commercial credit. “Ultimately, we want to be the 100% full-service financial lender for the dealership.”
Beyond solid pricing, lenders must have the processes in place to meet their dealer-customers’ needs, said General Manager of Commercial Credit Matthew Darnell. For instance, floorplan financiers must be able to adjust to the needs of dealers looking to renovate and expand facilities, he said.
Lately, dealerships have been moving away from fancy, “bizarre looking” architecture to more marketable bricks and mortar, Russell said. “We need to support our dealer base, and the key is supporting them in a financially responsible way,” he said.
These days, commercial credit may be overly accessible, Russell cautioned. “Right now, we’re in a very positive lending environment, where you can get a lot of credit ― probably more than a dealership needs,” he said. “And you can hold on to that, because rates are cheap.”
But credit providers must beware of fraudulent financing and under-collateralization ― “forgetting your basic lending criteria” ― lest they get “burned,” he added.
The industry as a whole must be careful not to “let itself slip back into behaviors common during pre-crisis levels, a period of lending based on flawed assumptions,” Darnell said. “Our job in commercial credit and risk management is make sure we present an objective view of the fundamentals and not be swayed by the persuasive arguments, from one side or the other.”
Overall, Darnell predicts growth in the sector, though more modest expansion than in years past.