As a global award-winning supplier to the Automotive Finance industry, the annual opportunity to attend the world’s largest trade automotive event, in what is one of Sword Apak’s most important regions is always a ‘must attend’ event.
This year NADA100, marked 100 years of the NADA trade body, was held in New Orleans in late January. It’s always a great event for networking and catching up with people; it also presents an opportunity to gauge the latest thinking and gain insights on the different market perspectives from what is an international audience, albeit US attendees and exhibitors dominate.
NADA reflects on the global scale of the automotive industry; providing insights into the US retailing model, which gives us the chance to study the similarities and the nuances that exist across the international industry we serve. The event presents an impressive opportunity for dealers, manufacturers and suppliers, such as ourselves, to step back and appreciate the number of ideas and insights that is on offer.
A few key themes emerged for us:
Digitization and Integration
There was a fantastic amount of technology on display across the massive NADA Exposition and plenty spoken about the digital car buying journey. It’s an exciting time to be involved in auto finance. What was evident was that there is a need to connect this great technology to create better processes that enhance productivity and help car buyers to buy and maintain their cars.
As a business that integrates with other technology providers, we are proud to be at the leading edge of this evolving Application Process Interface (API) connected technology.
As the ‘connected car’ becomes a more commonly used expression, we also need to create ‘connected journeys’. The wide matrix of connection points across car buying and car ownership, often different for new and used, create the need to connect various technologies to reduce the ‘friction’ that can hamper the consumer’s journey. Even within the dealer/manufacturer/remarketing process technologies need to be better connected to improve the communication to the wider distribution channels.
So, while this year’s NADA showcased a great deal of innovative technology, in the years ahead, we need to establish how to connect this technology effectively. Already, our work in this area has seen us work in partnership with other vendors to develop API Gateways and we see this as a real way ahead. Perhaps next year, this connectivity and co-operative ethos will be a greater area for discussion at NADA 2018, we will be there to see and add our own insights on this important area.
Changes in Financing
The US market remains broadly upbeat, back-to-back record years for new car sales in 2015 and 2016 is a trend that seems set to moderate only modestly into 2017, with NADA forecasting sales of 17.1M new units, slightly down on 2016. Part of this brake on sales may be attributed to a marginally less confident outlook on financing. At the end of 2016, there was a rise in delinquencies, as increasing competition drove additional lending. As a result, some lenders have reined in their lending appetite in areas, such as, moving away from 72-month lending terms. The outlook for US finance is of stable growth this year. It highlights the link between car sales and car finance is increasingly synchronized.
The other notable change in financing was, as already mentioned, the rise in digitization and an increase in the number of providers offering online apps and widgets to support a move towards online car sales. Unlike the UK, federal regulations preclude manufacturers selling direct, so in the USA, the move to online is set to be dealer-led. We will watch this with interest.
Compliance and Regulation
An increase in compliance activities in the showroom from finance through the Consumer Financial Protection Bureau to data protection is increasing costs to dealers in the US, as is similar in other regions like the UK. In an increasingly transparent customer-led operating environment, increasing compliance has largely been seen as inevitable and important, especially in enhancing retention and reputation. The importance of returning customers being emphasised by a NADA 20 statistic that revealed 26% of customers choose their dealer due to prior experience.
The challenge highlighted in some forums was whether the compliance burden might be too heavy. Just days after the Convention, President Trump made a clear ‘statement’ on this issue taking his first step toward seeing through his promise to dismantle the Dodd-Frank Wall Street Reform and Consumer Protection Act, signing an executive order directing the Secretary of the Treasury to review the 2010 financial oversight law. We wait to see how significant this very notable decision will develop.
So, there we go NADA 2017 over for another year, but we’re sure the messages will continue to be seen throughout the year ahead.
By James Powell at 10 Feb 2017, 16:17 PM