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3 Drivers Transforming Automotive Financial Services

Man purchasing a car on a laptop

There are three big drivers transforming leasing and lending in the automotive financial services industry. Here is how no-code can help organizations capitalize on them.

The pandemic plummeted the automotive industry to record lows owing to unemployment, economic uncertainty, and country-wide lockdowns. As economic recovery began, consumers’ willingness to invest in automobiles increased—although cautiously.

We spotted many pandemic-induced trends, like an increase in first-time buyers in metropolitan areas and the need for flexible owning options, with leasing becoming favorable (and some even opting for contactless buying). The global automotive finance market is projected to grow from $245.62 billion in 2021 to $385.42 billion in 2028.

There has been a seemingly permanent behavioral shift to be more conservative in spending patterns and opt for digital experiences. In all the uncertainty that the pandemic has brought into the markets, one thing is certain: The firms that did not invest in digital transformation prior to 2020 lagged behind their peers.

Let’s dive deeper into the three biggest drivers transforming automotives—and how the automotive financial services industry can leverage no-code to capitalize on them.

1. Increase in car leases & used car sales

New vehicle sales in the U.S. saw an estimated 52% increase in Q2 2021 compared to 2020, but they are showing signs of slowing down. The semiconductor chip shortage caused automakers to significantly cut production, and the limited inventory is causing prices to skyrocket.

According to J.D. Power and LMC Automotive, “The average new-vehicle retail transaction price in June is expected to reach a record $40,206. The previous high for any month, $38,539, was set in May 2021.”   

As new car prices rise, consumers are looking for alternative paths to car ownership such as leasing and buying used. Analysts predict the car leasing market in particular will grow at a compound annual growth rate (CAGR) of 18% between 2021 and 2025. 

Meanwhile, the used car market is so hot that dealers are seeing unprecedented sales prices for vehicles with hundreds of thousands of miles on them—it’s still cheaper than buying new, after all. The Labor Department reported that U.S. consumer prices in April 2021 rose at their fastest pace since the Great Recession. Prices overall rose 4.2% from a year ago. A third of this historically large jump is attributed to the staggering increase in used car prices, which surged 10% (a record-breaking one-month jump) in April alone.

2. Enhanced interest in online purchasing

A global automotive survey conducted by Deloitte found that while 71% expected to buy in-person, 29% would purchase online (or partially online). Frost & Sullivan estimates that 825,000 new vehicles were sold online globally in 2019—and that an estimated 6 million will be sold online by 2025.

A global automotive survey conducted by Deloitte found that while 71% expected to buy in-person, 29% would purchase online (or partially online).

Tesla is one of the biggest disruptors in the automotive industry, and the company has created a strong use case for eCommerce sales. In order to adapt their business around decades-old regulations and a limited retail infrastructure, the company has embraced an online approach. “78% of all Model 3 orders were placed online, rather than in a store, and 82% of customers bought their Model 3 without ever having taken a test drive.”

To succeed in today’s highly competitive, volatile market, organizations need a digital-first mindset with the ability to swiftly adapt to ever-changing consumer requirements. Those looking to make significant headway in front of their peers in the automotive industry need a flexible and customizable self-service digital portal (optimized for mobile, of course) that makes it easy for consumers to shop for a new/used vehicle or lease.

Automotive finance organizations need to be able to provide digital experiences in a way that mimics an in-person experience. This can be easily done with a no-code application building platform like Unqork, which can get you up and running with a consumer-facing portal in weeks—or even days. 

  • Equip dealers with the ability to handle financing online with tailored rates and offerings based on their market

  • Make it easy for potential buyers to compare models

  • Streamline the loan approval process (capture identification, income, and resident information electronically) to get to the point-of-purchase faster

  • Capitalize on bundled deal offerings

3. The need to increase tight margins

Consumers expect a seamless, end-to-end digital experience in all facets of their online purchasing lives. With the economy reopened and Americans eager to travel, the automotive finance industry should be capitalizing on this opportunity to simplify the purchasing process. The digitization of finance over the last several years has eased the burden of applying for a loan or lease and increased the velocity in which consumers get approved, but there is more work that can be done to revolutionize the experience. 

Plagued by siloed systems and manual processes, automotive companies are in desperate need of a flexible, connected solution that digitizes their core processes. With slim margins, there needs to be a way to increase profits. Enter no-code. 

Unqork’s no-code platform accelerates the building of enterprise-grade applications 3x faster, with 600x fewer bugs, and at 65% less runtime total cost of ownership (TCO) compared to developing with code. This reduces costs, increases revenue, and improves operational efficiencies; three critical metrics for organizations looking to increase their margins. Below are some digitization opportunities that can be met with Unqork: 

  • End of lease: Reduce lease churn by more effectively engaging with customers as they near the end of their lease through personalized, automated workflows that present customers with additional leasing and purchasing options  

  • Data analytics: Understand the consumer and how to better serve them with easily accessible data (e.g., volume of financing, customer payment delinquency, risk reporting, all services sold, etc.), which you can connect and share between applications for consumers, relationship management, operations processes, risk management, and management reporting

  • Inventory & payment tracking: Proactively manage risk and stay on top of missed payments (e.g., low inventory on a sale model, individuals with a history of missed payments, etc.)
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No-code is the future of automotive finance 

As consumers become increasingly more reliant on eCommerce, the industry will have to continue to look for ways to transform the online buying experience. As supply chains continue to tighten and inflation rises, firms will need to maximize the value of their core processes to increase their margins.

To swiftly adapt to changing customer needs and new trends, firms will need to start their digital transformation journey now by embracing technology like no-code platforms. Unqork will enable firms to get their self-service applications, associated integrations, and end-to-end digital leasing and lending processes to market faster. This empowers the auto financial industry to enhance their consumer experiences and focus on their competitive advantage—instead of spending time developing, iterating, and maintaining code or trying to integrate siloed off-the-shelf solutions.

To experience Unqork first-hand, schedule a personalized demonstration with one of our in-house experts today. Also, sign up for the Unqork newsletter to learn more about no-code’s capabilities.