TABLE OF CONTENTS 0.0 EXECUTIVE SUMMARY INTRODUCTION... 3 What is this report about?... 3

Transcription

1 TABLE OF CONTENTS 0.0 EXECUTIVE SUMMARY INTRODUCTION... 3 What is this report about?... 3 The focus of the report is on financial services related to the sale of passenger cars to individuals... 3 Rationale... 3 The provision of financial services is essential to support both car sales and profitability... 3 This report offers a detailed and updated analysis of the subject in Canada based on primary research... 3 Methodology... 4 Survey of dealers and manufacturers... 4 Market data... 5 Computation of market data is based on a complex set of assumptions and variables... 5 in order to provide market segmentations in unrivalled detail... 5 External sources... 6 Definitions... 6 Finance and leasing products... 6 Insurance, warranty and assistance products... 6 Operating models... 7 Tied and non-tied providers... 8 Abbreviations... 8 Exchange rate... 8 PartnerBASE and market data annexe... 8 Finaccord MARKET ANALYSIS Introduction Passenger vehicle data Sales of both new and used passenger cars hit a five-year high point in No single manufacturer group takes a share of more than 20% of the new light vehicle market Consumer automotive finance and leasing market Market size and growth Used cars make up the majority of the finance and leasing market by volume and point-of-sale finance for used cars has been the most rapidly growing segment in recent years Types of finance and leasing product Car loans remain the dominant form of point-of-sale finance Consumer automotive insurance, warranty and assistance markets Market sizes The total value of insurance, warranty and assistance products sold by the automotive trade is substantial and is estimated by Finaccord at more than CAD 2.8 billion in Survey of automotive dealers and manufacturer brands - overview Introduction Provision of consumer automotive financial services There is a wide variety of automotive financial services that Canadian dealerships can potentially sell which is partly a consequence of the widespread nature of manufacturer-branded schemes Number and nature of dealer schemes On average, dealers have reduced the number of finance providers that they work with Types of creditor insurance policy sold by dealers FINACCORD (04/2018) I

2 Creditor insurance policies in the automotive sector always comprise comprehensive cover Types of motor insurance policy sold by dealers and most motor insurance policies also do so Sources of road assistance distributed by dealers Road assistance is always bundled with factory warranties and usually with extended warranties Consumer uptake of automotive financial services through dealers Take-up rates for point-of-sale finance and leasing have fallen slightly in recent years but have increased for several other products Survey of automotive dealers and manufacturer brands - partnerships Introduction Finance and leasing Three providers account for over a half of non-tied point-of-sale finance relationships with dealers but competition comes from a long tail of national and province-specific rivals All manufacturer brands have a captive or preferred provider in this field with Scotiabank identifiable as the leading non-captive provider In the combined analysis, four providers are found likely to control almost 50% of the market Creditor insurance A number of dealers have made separate arrangements for this product with ia-sal holding the vast majority of these relationships ia Financial Group has boosted its position in the dealer channel through acquisitions Manufacturer brands hold both direct and indirect relationships for creditor insurance Motor insurance Comparatively few Canadian dealers distribute motor (auto) insurance and most that do use ICBC or ia-sal as provider Allianz, Allstate, Aviva and SmartCoverage all benefit from partnerships with manufacturer brands GAP insurance Dealers mostly employ non-tied partners, since relatively few manufacturer brands have a scheme with nine such partners identified in total, led by ia-sal, SSQ and Walkaway Only nine out of the 33 manufacturer brands researched have an arrangement for GAP protection and two of these work with Safe-Guard in this sphere Extended warranties At least eight non-tied providers distribute extended warranties through dealers Lubrico has built up a distribution network that spans more than 4,000 dealers Most schemes for extended warranties are arranged internally albeit ia-sal emerges as the leading external provider in the combined analysis Road assistance Over 50% of dealers work exclusively with tied providers for road assistance Viewed in weighted terms, three providers account for over 90% of manufacturer brand relationships Sykes Assistance Services is foremost among these followed by Club Auto Roadside Services and Allstate Prepaid maintenance contracts Where available, dealers tend to focus on offering manufacturer-branded contracts all of which are managed internally by the manufacturers themselves Scratch and dent protection ia-sal and Sym-Tech hold the most non-tied partnerships for scratch and dent protection A number of manufacturer brands have developed their own scratch and dent protection products Tire and rim protection ia-sal and Sym-Tech are also the most prominent in the tire and rim protection sector followed by Diamond-Kote and Tricor A majority of manufacturer brands have an arrangement for tire and rim protection Excess wear and tear protection Dealers focus mainly on distributing manufacturer brands own excess wear and tear protection cover FINACCORD (04/2018) II

3 which are mainly configured and managed on an internal basis FINACCORD (04/2018) III

4 LIST OF GRAPHICS / TABLES 0.0 EXECUTIVE SUMMARY... 1 Key market data for consumer automotive financial services in Canada, INTRODUCTION MARKET ANALYSIS Passenger car parc and new / used passenger car sales in Canada, 2013 to Passenger car parc and new / used passenger car sales in Canada, 2013 to 2017 (table) New light passenger vehicle sales in Canada, segmented by manufacturer group, New and used passenger car finance market in Canada, segmented by distribution channel: volumes, 2013 to New and used passenger car finance market in Canada, segmented by distribution channel: values, 2013 to New and used passenger car finance market in Canada, segmented by distribution channel: values and volumes, 2013 to 2017 (table) % split between the different types of finance and leasing contract organised at the point of sale in Canada, Total revenues from consumer automotive insurance, warranty, assistance and service contract markets distributed via the automotive trade in Canada, Total revenues from consumer automotive insurance, warranty assistance and service contracts distributed via the automotive trade in Canada, 2017 (table) Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in Canada, Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Canada, 2017 (table) Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Canada, % split between the different types of creditor insurance policy sold at the point of sale in Canada, % split between the different types of motor insurance policy sold at the point of sale in Canada, % availability of road assistance through factory warranties, annual services, extended warranties, motor insurance, prepaid service contracts and as a stand-alone product in Canada, % of new and used car purchasers acquiring each type of automotive financial service at the point of sale (where made available) in Canada, Provision of finance and leasing by dealers in Canada, 2017: provision rate, product sources and provider share of non-tied partnerships Provision of finance and leasing by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships Implied market shares of new business for finance and leasing at the point of sale in Canada, Provision of creditor insurance by dealers in Canada, 2017: provision rate, product sources and provider share of non-tied partnerships Provision of creditor insurance by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships Provision of motor insurance by dealers in Canada, 2017: provision rate, product sources and provider share of non-tied partnerships Provision of motor insurance by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships Provision of GAP insurance by dealers in Canada, 2017: provision rate, product sources and provider share of non-tied partnerships Provision of GAP insurance by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships FINACCORD (04/2018) IV

5 Provision of extended warranties by dealers in Canada, 2017: provision rate, product sources and provider share of non-tied partnerships Provision of extended warranties by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships Implied market shares of new business for extended warranties at the point of sale in Canada, Provision of road assistance by dealers in Canada, 2017: provision rate and product sources Provision of road assistance by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships Provision of prepaid maintenance contracts by dealers in Canada, 2017: provision rate and product sources Provision of prepaid maintenance contracts by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships Provision of scratch and dent protection by dealers in Canada, 2017: provision rate, product sources and provider share of non-tied partnerships Provision of scratch and dent protection by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships Provision of tire and rim protection by dealers in Canada, 2017: provision rate, product sources and provider share of non-tied partnerships Provision of tire and rim protection by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships Provision of excess wear and tear protection by dealers in Canada, 2017: provision rate and product sources Provision of excess wear and tear protection by manufacturer brands in Canada, 2017: provision rate, operating models and weighted provider share of partnerships FINACCORD (04/2018) V