What’s Next in Auto Finance Innovation?
Wisconsin recently joined more than a dozen states that have already adopted electronic lien and title programs. The money-saving move substitutes paper documents with digital copies, which reduces operational costs and fraud.
“The financial industry continues to focus on removing paper from operations and auto financing is no exception,” said Larry Highbloom, president of automotive collateral management services company VINtek.
Going paperless also demonstrates a belated but rising acceptance of innovation in the market. That type of honest innovation is at the core of “Futurewatch: A Deep Dive into the Technology of Tomorrow,” just one of a wide variety of discussions lined up at the Auto Finance Summit.
Take part in the opportunity to learn about the risks and rewards of innovation and the digital future of Auto Finance. The agenda is packed with workshops, panels, and our annual Excellence Awards Ceremony to give you the resources and knowledge you need to accelerate your company and innovate.
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There is certainly pent up demand! There are still credit challenges based on the unemployment level and hits consumers have taken to their credit reports. It seems evident that people at the top of the credit scale can mostly get financing for a vehicle. The folks at the bottom can still get financed from the BHPH segment with limitations brought about by a shortage of both inventory and capital. But it’s the consumers in the middle, between Super Prime and BHPH where there is difficulty getting financing put together. If it weren’t for credit unions, this extremely large segment would be even more under served.
We still have to deal with the fact that so many people are upside down in their mortgages. This will take a long time to work out, and I don’t have a clear picture of how it will come about. Here in Las Vegas I am told 67% of mortgages are upside down. Fortunately that doesn’t represent the entire economy.
Having said all this, the pent up demand and high pre-owned vehicle prices will be strong going forward. Of course, there will be a severe shortage of premium pre-owned inventory. As people have kept their vehicles longer, running up more and more miles on them, values will stay high for low mile premium units. IF the OEMs can resist the urge to return to over production and large incentives, there is even more room for pre-owned prices to rise.
We are truly in uncharted territory. It is hard to predict exactly how things might play out. But it is clear that there is a HUGE opportunity for residual based financing, both lease and balloon, for those with capital to put on the street. They can pick their spots, stay conservative on residuals and be protected by the ongoing pre-owned shortage. And there is always the depreciation that institutions can realize on leases because the vehicle title is held in their name!
It seems clear the worst is over. The vibe at the conference was certainly optimistic and it was the most informative conference I have ever attended. I also got a lot out of Paul McCarthy’s presentation! Economic data can be pretty “dry” but Paul made it come alive.
Jerry Thompson and Adam Berger’s break out session on opportunities in leasing was certainly eye opening. Having Rene Abdulah from RVI present added to the session as he had some new developments to announce.
Great conference JJ! And what a coup having Rick Wade from the Auto Task Force speak! How did you pull that off?