PRESS RELEASE: Consumer Automotive Finance Services in Europe
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PRESS RELEASE: Consumer Automotive Finance Services in Europe

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Insurance, warranty and assistance services sold by the automotive trade in Europe are worth more than EUR 900 in revenue for every new car sold to consumers. ...

Insurance, warranty and assistance services sold by the automotive trade in Europe are worth more than EUR 900 in revenue for every new car sold to consumers.

London, 16 January 2014 - Across much of Europe, car dealers and manufacturers have had a tough time in recent years, with new car registrations falling in a majority of countries albeit with a few exceptions such as Russia, Turkey and the UK. This environment means that dealerships have become more reliant than ever on generating revenue from financial and other services that can be cross-sold with cars, as have car manufacturers.

Finaccord, a market research consultancy specialising in financial services, has recently produced an analysis of the value of major insurance, warranty and assistance products sold by car dealers and manufacturer brands to consumers across 25 European countries. It estimates that dealers sold policies worth EUR 16.3 billion in revenue in 2012 (measured as gross written premiums and similar revenues) across six major insurance, warranty and assistance types plus niche insurance products that are present in some of these countries. The six main types are motor insurance, extended warranties, prepaid service contracts, creditor insurance, GAP (guaranteed asset protection) insurance and road assistance, while the niche products range from passenger accident insurance in Austria to tyre insurance in the UK.

Just over half of this figure was new business generated from car sales made in 2012 itself (EUR 8.6 billion), while the rest came from policies connected to cars sold in previous years that were still in force in 2012 (EUR 7.7 billion).

Comments David Parry, Managing Consultant at Finaccord: “Sales of insurance, warranty and assistance services were worth an average of EUR 448 for every new car sold to individual customers in 2012, compared to EUR 261 for used cars sold by dealers. However, the used car market was more valuable in percentage terms because this figure was worth 2.6% of the value of all used cars sold by dealers compared to 2.0% for new cars. This covers new sales in 2012 only – if you add in policies sold in previous years that are still in force, these services were worth EUR 905 for every new car sold to individuals and EUR 467 for every used car sold by dealers in 2012."

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PRESS RELEASE: Consumer Automotive Finance Services in Europe PRESS RELEASE: Consumer Automotive Finance Services in Europe Document Transcript

  • PRESS RELEASE Consumer Automotive Finance Services in Europe Insurance, warranty and assistance services sold by the automotive trade in Europe are worth more than EUR 900 in revenue for every new car sold to consumers London, 16 January 2014 - Across much of Europe, car dealers and manufacturers have had a tough time in recent years, with new car registrations falling in a majority of countries albeit with a few exceptions such as Russia, Turkey and the UK. This environment means that dealerships have become more reliant than ever on generating revenue from financial and other services that can be cross-sold with cars, as have car manufacturers. Finaccord, a market research consultancy specialising in financial services, has recently produced an analysis of the value of major insurance, warranty and assistance products sold by car dealers and manufacturer brands to consumers across 25 European countries. It estimates that dealers sold policies worth EUR 16.3 billion in revenue in 2012 (measured as gross written premiums and similar revenues) across six major insurance, warranty and assistance types plus niche insurance products that are present in some of these countries. The six main types are motor insurance, extended warranties, prepaid service contracts, creditor insurance, GAP (guaranteed asset protection) insurance and road assistance, while the niche products range from passenger accident insurance in Austria to tyre insurance in the UK. Just over half of this figure was new business generated from car sales made in 2012 itself (EUR 8.6 billion), while the rest came from policies connected to cars sold in previous years that were still in force in 2012 (EUR 7.7 billion). Comments David Parry, Managing Consultant at Finaccord: “Sales of insurance, warranty and assistance services were worth an average of EUR 448 for every new car sold to individual customers in 2012, compared to EUR 261 for used cars sold by dealers. However, the used car market was more valuable in percentage terms because this figure was worth 2.6% of the value of all used cars sold by dealers compared to 2.0% for new cars. This covers new sales in 2012 only – if you add in policies sold in previous years that are still in force, these services were worth EUR 905 for every new car sold to individuals and EUR 467 for every used car sold by dealers in 2012." In some countries, revenue from the sale of these financial services is nearly twice that of the European average:  for new cars, new business from these products amounted to 2.6% of the value of cars sold to consumers in Denmark, France and Italy in 2012, and it was above average in Portugal, Spain, Sweden and the UK as well;  for used cars, new business from these products amounted to 3.7% of the value of cars sold to consumers in Sweden in 2012, and it was also above average in Denmark, France, Germany, Romania, Switzerland and the UK;  in contrast, dealers in Ireland and Ukraine are relatively weak at selling automotive financial services, and generated new business worth just 0.6% of the combined value of new and used car sales through these products in 2012. The chart overleaf shows the value of new business for the six main contract types named above plus other niche products that exist in different countries, measured in terms of gross premiums written and other revenue as a percentage of the combined value of new and used cars sold by dealers to retail customers in 2012. This is for ten of the 25 countries studied by Finaccord, namely the six largest markets in Europe for these products overall plus two other countries where these products are at their most important and the two countries where they are least important, in percentage terms. Motor insurance is the most important of these financial services, amounting to 46% of these revenues coming from the automotive trade; Germany and Russia were the most important markets for motor insurance sold through this channel, with gross written premiums of EUR 324 million and EUR 481 million respectively, for new business in 2012. However, this means that across Europe as a whole over half of this market is made up from other products, and in France and the UK motor insurance accounts for no more
  • than 20% of these revenues. Instead, in these two countries 50% or more of these revenues came from new extended warranties and prepaid service contracts combined. “Insurance, warranty and assistance products generate valuable additional revenues at a time when car sales are struggling in many countries", observes David Parry. "They also increase customer loyalty, especially in the case of extended warranties and prepaid service contracts which bring the customer back to the dealership. Finaccord estimates that across Europe 16% of revenues for these additional products were for extended warranties while 14% came from prepaid service contracts, amounting to new business worth EUR 2.6 billion and EUR 2.2 billion for 2012, respectively." --- END --Media contact: Roberto Napolitano, +44 (0)20 3178 2556, rnapolitano@finaccord.com Notes to editors: Finaccord is a market research, publishing and consulting company specialising in financial services. It provides its clients with insight into and information about major issues in financial services in the UK, Europe and major global markets, with a particular focus on marketing and distribution topics such as affinity marketing, bancassurance and strategic alliances. The Consumer Automotive Financial Services Automotive in Europe series delivers comprehensive and in-depth research across 25 countries in Europe (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovakia, Spain, Sweden, Switzerland, Turkey, UK and Ukraine). Based on a survey of 1,350 dealers in these countries and an investigation typically covering between 30 and 40 automotive brands in each territory, the study delivers unique insights into the market for financial services sold with new and used passenger cars bought by consumers, with fully comparable and standardised data for market values. Sample graphic from the research, showing the importance of consumer automotive financial services to the automotive trade in 2012 in ten European countries. This shows the value of motor insurance, extended warranties, prepaid service contracts, creditor insurance, GAP insurance, road assistance and other niche insurance products in terms of gross premiums written and other revenue received in 2012 from policies sold that year, as a percentage of the value of new and used cars sold by dealers to retail customers in 2012. 3.5% 3.1% 3.1% 2.9% 3.0% 2.8% 2.7% 2.5% 2.2% 2.0% 1.6% 1.5% 1.3% 1.0% 0.6% 0.6% Ireland Ukraine 0.5% 0.0% Sweden UK Germany France Denmark Poland Slovakia Belgium