Automotive captive finance company competitive strategy

An automotive captive finance company’s business was being challenged by growth in credit unions, direct lenders, and credit aggregators offering low-rate auto loans and other financial products. The strategies, size, and relative success of these competitors were unknown to the client. The client management wanted to develop an optimal response to the evolving competitive dynamic.

Strategy& performed due diligence of the threats posed by direct lenders and credit unions to the originations and portfolio of the captive through a comprehensive competitive study. We quantified the inherent economic advantages (e.g., cost of funds, operating costs, tax-advantaged status) enjoyed by competitors, determined the magnitude of the potential impact on the client’s portfolio, evaluated partnership opportunities, and made recommendations to enhance and market the value proposition of the captive to the dealer body.