When it comes to the pandemic it’s not a question of if an industry is impacted but how. For auto finance, there are immediate impacts that need to be addressed now as well as longer-term changes which are speeding up long-discussed innovations.
The most immediate impact has been the sudden and drastic decline in vehicle transactions. In addition to buyer’s loss of income to spend on big ticket items, buyers are just starting to trickle back into dealerships after they (and bank branches) were ordered closed by state governments. This has made financing in most parts of the country difficult, if not impossible. State restrictions easing and allowing dealerships to open is good news for auto finance as our research shows that those who were intending to buy or lease before COVID-19 are primarily postponing the transaction rather than canceling it entirely.
As for longer-term impacts, the auto finance industry was already in a state of rapid change prior to COVID-19 and the pandemic has only accelerated the pace of that change. Auto finance companies have been actively looking to increase efficiencies by making various elements of the customer experience more digitized. Where in the past, some of these changes might have received push back from customers, the pandemic is making digital solutions more acceptable, and more expected, than ever. Buying and financing a car entirely online is suddenly not as remote an idea as it was only a short time ago. Given this rapid pace of change, it is more important than ever that auto finance organizations keep their finger on the pulse of the marketplace through ongoing insight gathering efforts.
Beyond helping our clients understand how to maximize satisfaction during each of the customer lifecycle touchpoints, Escalent remains engaged in a wide variety of cutting edge research—including exploring emerging mobility solutions, receptivity to new finance and leasing models like vehicle subscriptions, pay-per-use and flexible leasing terms. We are helping clients explore digital service concepts like online car buying, electronic contracts, automated online assistance and others. During the COVID-19 pandemic we are also helping our clients understand how customers would like to see their auto finance companies respond.
At the end of the day, it’s all about how customers feel they are being treated by auto finance companies in response to the pandemic, and that response will have a very real impact on customer long-term loyalty. If customers are leasing and driving fewer miles, they want that to be taken into account. Customers are also looking to their auto finance companies for flexibility to work with them during these difficult times with options like extended terms or deferred payments. We are seeing that companies that deliver this type of relief are being exceptionally well-embraced—building loyalty that could last a lifetime based on the strength of the comments we are seeing from grateful customers.
For more on the impact of pandemic an recession on the financial services industry, click below to check out our COVID-19 Market Research Perspectives.