Vazquez takes the stage on May 13 at 11:15 a.m. PT for a presentation where he’ll touch on steps for identifying a target audience, best practices in multimedia marketing and analytics, and creating compelling stories to drive consumer preference.
Vazquez began his 17-year tenure with Westlake Financial in March 2002 as a dealer account manager. He was promoted to regional sales manager and vice president of sales before becoming the head of sales and marketing in February 2013.
Westlake’s portfolio shot up 35% last year, to a record $8.3 billion, the company announced in a press release last month. Westlake held $3.9 billion in auto loans outstanding at the end of 2017, up from $3.1 billion the year prior, according to Big Wheels Auto Finance.
On the heels of launching artificial intelligence algorithms in its underwriting processes, subprime lender Tricolor Auto Acceptance has started testing AI in another area of the business.
Chief Executive Daniel Chu said the buy-here, pay-here lender, which focuses on Hispanic car buyers, is using AI in its Guadalajara, Mexico, call center. The niche lender has started testing voice intonation AI within some buckets of delinquent loan borrowers. “If you’re asking customers questions over the phone, you can have some insight into how truthful those responses are,” Chu told AFN.
Testing for these AI tools started about two months ago and is expected to continue through June. There are about 170 Tricolor employees in Guadalajara, Chu added.
Tricolor is also employing AI to determine the best time to reach consumers, Chu said. “Our customers, on average, work 60 hours a week, so we use AI to figure out the most efficient times to reach them, in order to make call center activity more efficient,” he said.
For more content like this, check out our upcoming event Auto Finance Accelerate, May 13-16 at the Omni San Diego. Visit www.AutoFinanceAccelerate.com to register.
From the February issue: Credit unions have been grabbing marketshare by dipping into lower credit scores and making more exceptions, a sampling of dealers nationwide told Auto Finance News. As a result, larger banks and other financial lending institutions are missing out on potential borrowers, dealers said.
Lower Valley Credit Union and Numerica Credit Union are “definitely opening up their book of business,” said James Korolev, finance manager at Archibald’s used-car dealership in Kennewick, Wash. The pair of credit unions, plus several other local CUs, have picked up customers with low credit scores, as long as the structure makes sense and the consumer is in a good equity position, he said.
In some cases, though, credit unions will advance as much as 140% of a vehicle’s book value for strong credit quality customers who are upside-down on their loans. That LTV is “way outside” their guidelines, which typically cap out at 125% of book value, Korolev said.
Groveport, Ohio-based Ricart Automotive Group is also seeing credit unions boost their credit appetites. The caveat, though, is that the consumers become members and conduct more business than a single auto loan with the credit union, said Rick Ricart, the dealership’s director of sales and marketing.
“The credit unions really don’t just give an indirect loan and send the payment book and wipe their hands clean,” Ricart said. “They’re getting someone that’s not just responsible to pay a car payment that they don’t know anything else about.” Rather, he said, they’re building a “more intimate relationship” at a faster clip than traditional lenders, he added.
Credit unions also place parameters on membership eligibility, Ricart said, based on where the consumer lives, works, or worships. If a consumer qualifies to be a member of a credit union, when it comes time to take out an auto loan, “credit unions are willing to take on a little more risk because they already have a better feeling about the consumer,” he added.
Despite Daimler AG and BMW Group’s $1.1 billion investment in a mobility and ride-hailing joint venture, the companies’ captives will continue to operate as competitors.
“The core business with vehicles will remain unaffected, and the competition in the premium market will be maintained,” Daimler Financial Services spokesman James Ryan told Auto Finance News. “This also holds true for automotive financing.”
Yet, J.D. Power Senior Director of Automotive Finance Jim Houston predicted that collaboration between BMW Financial Services and Daimler Financial is inevitable.
“At some point in time, the companies will collectively benchmark each other with prearranged discussion as to how they are going to finance these vehicles,” Houston said. Granted, those discussions and potential collaboration will likely take several years, he added.
For now, the joint venture is “one more domino falling in what we see as furthering the trend in OEMs teaming up to address major market changes with mobility,” said Jeremy Acevedo, manager of industry analysis at Edmunds.
“Ride-hailing and the availability of vehicle-sharing is a huge step toward this autonomous future OEMs envision,” Acevedo said, noting that it makes sense for OEMs to begin acclimating consumers to the concept of alternate ownership options.
“Even as these automakers are teaming up to have these atypical car-driving experiences that don’t have financing, it’s clear from this messaging that financing is still very far away and it’s going to take the [captive] finance arms quite a bit of time to finance and invest in this,” Acevedo said.
As for future investments in innovation, Daimler is looking to implement a growth strategy with new products, advanced technologies, and modern production capabilities, Ryan said, adding that Daimler will continue its “innovation offensive with vigor in the coming years.”
Daimler plans to invest $17 billion in property, plant, and equipment initiatives, and more than $20 billion in research and development projects through 2020, he said.
For more content like this, check out our upcoming event Auto Finance Accelerate, May 13-16 at the Omni San Diego. Visit www.AutoFinanceAccelerate.com to register.
Regions Bank has set the wheels in motion to shutter its indirect auto lending business, Auto Finance News has learned. The Birmingham, Ala.-based bank will continue to originate direct auto loans.
“We informed the dealers and sent out a notice to them on Jan. 14,” Tom Lazenby, senior vice president and line of business executive for Regions Bank’s Dealer Financial Services unit, told Auto Finance News. “We will be purchasing paper through March 4, and we will fund loans through April 1.”
Regions Bank had $3.1 billion of loans outstanding at yearend 2018. Its portfolio has declined 24.4% since 2016.
The bank mentioned the auto exit in its most recent 10-K, filed Feb. 22 with the Securities and Exchange Commission.
“In January 2019, Regions decided to discontinue its indirect auto lending business due to competition-based margin compression impacting overall returns on the portfolio,” according to the 10-K. “Regions will cease originating new indirect auto loans in the first quarter of 2019 and intends to complete any in-process indirect auto loan closings by the end of the second quarter of 2019. The company will remain in the direct auto lending business.”
Though the exit was noted in the bank’s annual report, it was not mentioned on a Jan. 18 earnings call. The only reference to auto finance in that call was a question related to charge-off expectations, to which Chief Credit Officer Barb Godin answered: “Indirect auto has been behaving well for us, so we see that holding pretty steady.”
The move was explained in more detail at Regions Bank’s Investor Day 2019, which took place yesterday. A slide presented by Scott Peters, head of Regions Consumer Banking Group, noted that the bank was “optimizing capital by exiting less profitable businesses” and that it “exited dealer indirect” in 2019.
Here’s how Peters explained the auto exit:
“All of our product and business strategies are looked at through a lens of risk-adjusted returns and relationship opportunity, and we constantly look at the balance of our business and manage our concentrations. Some examples of that have been how we’ve treated our indirect auto business. A few years ago, we exited a flow arrangement we had in indirect auto because the risk-adjusted returns were challenged and we put it in a runoff portfolio. And as John mentioned today, risk-adjusted returns on the auto business have been really challenged and are sub-optimal for us, so we are exiting that business, with our last fundings occurring right around the end of the first quarter.”
A question by Steven Scouten, a managing director at Sandler O’Neill, in the Q&A portion of the Investor Day event prompted Peters to elaborate on the move.
“I’d like to start with: we don’t want to grow just to grow. Our indirect auto business, essentially, we weren’t making any money there. We want to deploy our capital into things that are going to give us healthy returns, and this move out of indirect auto is going to allow us to put that capital to work in other products and businesses that make sense. Another element on indirect auto is that it’s not a very strong relationship product. It doesn’t provide a lot of opportunities for expanding those relationships. The mortgage product, on the other hand, is a relationship product where we get a lot of opportunity to grow the overall customer profitability with those assets and it’s a good, strong performing asset on our balance sheet, as well.”
Starting in 2015, Regions deactivated about a third of its dealers in an effort to bolster operational efficiency. “We spent a lot of time in past two to three years managing our dealer base because that’s where a lot of efficiencies start,” Lazenby said at the 2017 Auto Finance Summit. For example, Regions developed additional dealer parameters to lower losses, although Lazenby declined to specify the parameters or the bank’s dealer network size.
At the time, Regions focused on relationships with midsize dealer groups, “because we found that’s where we get best efficiencies and the best performance,” he said. In the wake of those enhanced relationships, the bank expanded its footprint into four additional states.
Regions has exited the indirect auto finance space twice before, most recently in October 2008.
Boosting floorplan financing volume is top of mind for Bank of the West, Michael Pereira, the bank’s executive vice president and head of personal finance, told Auto Finance News. “The flooring is very much integrated within our [retail] program,” Pereira said, adding that the lender is making strides to better connect with and service dealer […]
LAS VEGAS – Lenders that use alternative data for underwriting should tread carefully until regulation has a chance to catch up, said executives at a securitization conference yesterday. “We want to support business and don’t want to stifle innovation, but we have to move in a measured way,” Rostin Behnam, commissioner of the Commodity Futures […]
Fresh research from Kroll Bond Rating Agency shows that, contrary to popular belief, seasoning may not be the most accurate indicator of a subprime loan’s performance. Data from KBRA’s Subprime Auto Loan ABS report published Thursday illustrates that “very seasoned” subprime loans — those with 48 months of payment history — exhibited higher net losses […]
Daimler AG and BMW AG are pouring more than 1 billion euros ($1.13 billion) into their joint car-sharing and ride-hailing businesses to take on the likes of Uber Technologies Inc. and Lyft Inc. The German venture, which is estimated to become the world’s largest car-sharing operator, will weigh purchases of startups or established players, along […]
Despite concern that rising interest rates will slow new-car sales, loan term extensions will move the needle quicker on monthly loan payments, Brian Landau, senior vice president and TransUnion’s auto line of business leader, told Auto Finance News. Auto lenders originated 7.1 million loans through the third quarter of 2018, up 0.5% year over year, TransUnion reported this […]
