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At this point it has become quite evident that covid-19 will have a long-term impact on people’s lives and economies worldwide. A great deal of the auto finance companies is addressing the immediate challenges that the pandemic has brought around: protecting employees and satisfying the new customers’ needs. They are continuing to show support despite an increase in non-performing loans and a decrease in revenue.
Taking all the recent changes into account, auto financiers should put more focus on the short-term impacts in the following key aspects of retail and commercial banking, while building up a safe foundation for longer-term business model adjustments.
Experts suggest we should be expecting an increase in non-performing loans, due to a large number of consumers and businesses being unable to make loan/lease payments. This will be accompanied by a growing demand for new credit.
In order to deal with the financial crisis of 2008, auto lenders started creating modified programs, such as zero-percent interest. Now, the latter may need to be expanded in very short timelines. Lenders should also build a platform to effectively resolve issues with the increasing volume of delinquent and defaulting loans. Intelligent automation might come in handy here, keeping the performance indicators up and relieving workers from the heavy load. Yet, in crisis situations it is important to remember about the value of real human engagement and building trust with the customer.
It is predicted that the US auto sales will drop by 15% this year. This will likely lead to some dealership companies closing forever, which will contract the lending market. Besides, millions of lost jobs and the economic hardship of recent months will affect customers’ auto finances in a negative manner.
Customer service and advice provision
We are shortly expecting an increase in demand for advice for both short- and long-term money management. In times of social distancing, taking care of these issues online with the help of digital tools is highly preferred and at times necessary. The new customer that interacts with the service provider remotely needs to be educated and guided until he gets fully familiar with the process. Regardless of the industry, it is important for companies to focus on digital assistance channels, in order to retain the existing customers and make their online journey pleasant and comprehensive.
Operating model, cost control & innovation
While there are numerous urgent issues that must be addressed immediately, companies should not neglect the long-term perspective. Dealing with short-term problems must be done with keeping one eye on the future. Making strategic adjustments to the operating model and supply chain, while integrating innovative tools for smart automation could potentially become the perfect counter-crisis formula for automotive businesses. At the end of the day, it is clear that some aspects like customers and cost control must be prioritized under all circumstances.