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Consumer Automotive Financial Services in the USA
A large used car market and high customer attachment rates driven by first-class training and point-of-
sale technology make the US the largest market for automotive F&I products in the world
London, 24 April 2014 – The value of finance and insurance (F&I) products sold with automobiles in
the US far outweighed those sold in any other country in 2013, according to new research from
Finaccord, a market research consultancy specialising in financial services. Three factors above all
contributed to this result, which were the high attachment (take-up) rates achieved by American
dealerships in selling these products, the size of the used car market in the US, and the importance of
vehicle service contracts or extended warranties within this total.
Although China became the largest new passenger car market in the world back in 2009, the US has
by far the largest used car market in the world, thanks to the maturity of its automobile industry. As a
result, Finaccord estimates that a total of 53.6 million new and used cars were sold in the US in 2013,
almost level with the combined total of 55.1 million for China, Japan, Germany, Russia and the UK.
However, the value of finance and insurance products sold at the point of sale with these automobiles
was far higher in the USA than in these other five countries combined.
Looking at finance and leasing to begin with, and focusing only on private customers (i.e. excluding
company cars and fleets), Finaccord estimates that the value of gross advances and assets leased at
the point of sale in the US in 2013 was USD 375.0 billion, well ahead of the equivalent figure of USD
210.5 billion for China, Japan, Germany, Russia and the UK taken together. The main reason for this
was the high proportion of customers that take out a loan or lease at dealerships in the US compared
to other countries, especially for used cars, as shown in the graph overleaf. In the US, 73% of new car
customers and 70% of used car customers took out a loan or lease at the point of sale, where these
products were made available through dealerships; Russia had the next-highest scores, also at 73%
for new cars but dropping to 55% for used car buyers.
“About 41 million used cars were sold in the US in 2013, compared to 25 million for China, Japan,
Germany, Russia and the UK combined. More of these were financed at the point of sale in the US
than in these five other countries, with a significant proportion of used car buyers being sub-prime
customers. In most countries, sub-prime customers can't get a loan through dealerships and must
either pay cash or get finance separately from specialist lenders; in contrast, there are many lenders
active through this channel in the US, including dealerships themselves" comments David Parry,
Managing Consultant at Finaccord. "The economic crisis has squeezed this segment even further
in Europe, but it has recovered well in the US since 2009."
Finaccord also looked at a range of additional products sold by dealerships in each country, notably
automobile insurance, creditor insurance, GAP protection, prepaid maintenance, road assistance and
vehicle service contracts (or extended warranties) plus niche products (where relevant) such as excess
wear and tear protection, minor damage protection, and tire and wheel protection.
Once again, the US emerged substantially ahead of all of these other major markets together, with an
estimated USD 24.8 billion of premiums and revenues for new contracts sold in 2013 against USD
18.3 billion for China, Japan, Germany, Russia and the UK combined. Another way to gauge the
importance of these revenues is to measure them against the underlying value of new cars bought by
private customers and used cars sold by dealers. For the US, these additional revenues amounted to
3.6% of this underlying value, significantly higher than in these other five markets where they averaged
2.5% of the underlying value of automobile sales.
"In the US, vehicle service contracts (or extended warranties) are the dominant product cross-sold with
automobiles, in contrast to China or Russia where auto insurance is the major product. But policies
such as GAP protection, prepaid maintenance and minor damage protection also sell well in the US.
There is a limit to how many 'extras' can be added to the sale of a car, and one of the ways that
dealerships achieve strong results in the US is through efficient menu-based sales systems and good
staff training, to tailor a proposition to a customer's needs," concludes David Parry.
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Media contact: Alan Leach, +44 (0)20 3178 2557, email@example.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 new Consumer Automotive Financial Services in the USA report consists of an overview report plus four
regional titles, concentrating on the Midwest, Northeast, South and West, and is based on a survey of 250
dealers plus an analysis of 40 manufacturer brands. Equivalent reports for China, Japan, Germany, Russia
and the UK have been published in 2013 and 2014.
Analysis of take-up rates for finance and leasing: the following chart shows the proportion of new car and
used car customers that bought a car using some form of finance or leasing taken out through a dealership,
where the dealer offered such products.
0% 20% 40% 60% 80% 100%
t New cars Used cars t