Author Archives: Carguy
Volvo subscription service eyes growth with FICO alliance
Volvo Car Financial Services’ subscription model, Care by Volvo, is making an effort to increase its volume of users via a partnership with Fico’s Decision Modeler.
Care by Volvo, which operates in Germany and the U.S. — except New York — is looking to scale the subscription service across Europe and North America, the company noted. Volvo initially used online credit reference checks to onboard new customers to the subscription service during its pilot phase, which began in 2017. With Fico’s tool, Volvo is able to manage the “rules” behind its underwriting process and organize consumer data based on Volvo’s preferences, according to Fico’s website.
A number of OEMs — including BMW USA and Hyundai Motor Co. — have explored subscription services as a more flexible lease. Care by Volvo’s monthly payment, which includes a brand-new Volvo and covers all service and maintenance costs, starts at $700.
However, these services have come into question as being too costly for affordability-focused consumers. For example, in September Ford Motor Credit sold its subscription service, Canvas, portfolio to Fair. Also, at yearend 2018, General Motors Co. hit the pause button on subscription service Book by Cadillac, after launching two years prior in Los Angeles, Dallas, and New York.
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11 at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
Ally’s Doug Timmerman named Auto Finance Executive of the Year
Auto Finance News is pleased to announce Doug Timmerman, Ally Financial’s president of auto, as the inaugural Auto Finance Executive of the Year. Timmerman first joined Ally — then General Motors Acceptance Co. — back in 1986 and is now at the helm of a $80 billion auto portfolio.
Under Timmerman’s leadership, Ally broke a company record in the second quarter when used-car originations hit $5.24 billion. Overall originations continue to climb as well, increasing 14% year over year to $9.3 billion in the third quarter.
The Auto Finance Executive of the Year is chosen based on nominations by members of the industry and the senior editorial team at Auto Finance News. Executives are considered based on experience, leadership, vision and ability to shake up the industry with an innovative, forward-thinking approach to auto finance.
Ian Anderson, group president at Westlake Financial, and Charles “Chuck” Jones, head of national indirect lending at SunTrust Bank, were selected as Executives to Watch for 2020.
Read the full story — and more — in the December issue of Auto Finance News.
Westlake president outlines strategy to cut costs
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The ripple effect: Distressed repo industry threatens lender losses
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Data breaches: What to do when it happens to you
Friday at 5:15 p.m. your chief information officer calls saying she thinks the company has been hacked. The allegedly hacked customer records have not been posted, yet the tip appears legitimate. The CIO asks: “What do we do?”
Scenarios like this are increasingly common, and the reputational, regulatory and operational effects can be devastating. Your response should be swift and focused, and it should include:
MOBILIZATION: Responding to a data breach will involve resources from across your company’s functional groups — IT, HR, legal, risk, accounting, marketing — and from the C-suite to the affected line of business, as well as external resources such as breach counsel, forensic investigators, crisis management and PR teams, and notification mail processors. You should have a response plan in place before the incident, and you should mobilize your team immediately.
Many of the issues you face next will have civil and regulatory implications, and your discussions should have the benefit of legal privilege. You should consider engaging breach counsel first.
STABILIZATION: The first step in getting control of your data postincident is to patch whatever leak you may have. Your technical team should lock down any stolen or misused credentials, devices or system vulnerabilities and preserve evidence.
INVESTIGATION: Once the technical vulnerabilities have been addressed, identify the scope and duration of the incident; use outside forensic examiners, if necessary. At the same time, review contracts with any implicated third-party service providers, and identify applicable responsive insurance.
ANALYSIS: Data breaches are addressed primarily as a matter of state law, with every state defining and prescribing responses to a breach differently. You may also have obligations related to data breaches under contracts with your commercial vendors or suppliers. Understanding your responsibilities — to customers, regulators, counterparties and investors — turns heavily on the language of the data breach statutes in each implicated state, and the language of your contracts. Which states are implicated is largely determined by the location of your customers and your business operations. Whether your counterparties must be involved is determined by the language of your agreements. This is a highly fact-specific, largely “legal” analysis.
NOTIFICATION: Once you have identified the “what,” “how” and “who,” it’s time to notify your external stakeholders. This may involve notifying customers, contractual counterparties and investors, and will most-assuredly involve notifying state attorneys general. Notification requirements differ by state, both as to timing and substance. The timing for most statutes runs from knowledge of the breach, and may be as short as 24 hours.
EVOLUTION: To the extent there is a benefit to a data breach, it lies in identifying the facts and circumstances that led to the breach and using them to anticipate future threats and improve your systems and practices.
Chris Couch is a member (partner) in McGlinchey Stafford’s Birmingham, Ala., office and a Certified Information Privacy Professional (CIPP-US). Chris can be reached at ccouch@mcglinchey.com or (205) 725-6404. McGlinchey Stafford is the Compliance Partner of Auto Finance Excellence (AutoFinanceExcellence.org), a sister service of Auto Finance News.
SunTrust, Westlake Financial execs offer career advice
The executives of two of the top 30 auto financiers in the U.S. offered up guidance to industry veterans and those just entering the business. Auto Finance Excellence spoke with Westlake Financial Services President Ian Anderson and SunTrust Banks’ head of indirect lending, Chuck Jones, who, together, carry 60 years of industry experience.
Advice for new hires:
Entering the highly competitive and complex trade of auto finance can be a daunting experience. Anderson’s advice to those fresh in the industry is simple: “Show up 15 minutes early and stay 15 minutes late.”
Additionally, he advises new hires to be well-versed in data and to be active in technical applications, such as Microsoft Excel. In fact, Westlake’s ability to analyze data and make decisions quickly is one of the main reasons why the lender has grown its portfolio 40% year over year, Anderson said. The management team — starting at the director level up to company Founder and Chairman Don Hankey — know how to use Excel from an analysis perspective, he said.
SunTrust’s Jones, on the other hand, advises reinventing yourself every few years. “Take on new opportunities, and don’t be uncomfortable with what you’re doing,” he said.
In his 38-year tenure, Jones has had 22 career moves. For example, he served as a correctional officer at the Texas Department of Corrections and as an agriculture loan officer — to name a few roles. “Try to find something else to continue to learn and grow because you get greater opportunities that way,” he said.
Advice to industry leaders:
For those familiar with the industry, the advice from Anderson and Jones is straightforward but sometimes overlooked.
“This is a commoditized industry, and because of that, you have to constantly be looking at the bottom line by controlling your costs and losses,” Anderson said. You have to have the ability to pay your banks back. I know it sounds pretty basic, but I don’t think many people look at it as basic as it needs to be,” he added.
For Jones, the advice involves self-awareness: “Really stress your business. Be willing to walk away from segments that are performing poorly,” he said. Also, remember quality outshines quantity and never get too “focused on just the volume that you’re doing…make sure you have the right risk rewards in it,” he explained.
Automakers dangle record $4,500 discounts to clear old inventory
Automakers struggling to clear inventory of older models from U.S. dealerships probably will offer richer discounts to consumers this month than ever before, according to J.D. Power.
Incentive spending likely will rise 12% to $4,538 per vehicle in November, the market researcher estimated Wednesday, exceeding $4,500 for the first time. The growth in automakers’ outlays to entice consumers is outpacing transaction-price inflation, J.D. Power said.
Car companies typically boost incentives from November to December by roughly 4%, so spending could be headed further into “unprecedented territory,” Thomas King, the vice president of J.D. Power’s data and analytics division, said in a statement. He called the trend “concerning for the health of the industry.”
J.D. Power projects total light-vehicle sales will run at an adjusted annualized rate of 17.5 million in November, a slight improvement from 17.4 million a year ago. The researcher expects industry deliveries to drop to 16.8 million in 2020, from about 17.1 million this year.
—Craig Trudell (Bloomberg)
Auto ABS volume surpasses 2018 levels
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Exeter scraps IPO