Digitisation and the German motor finance market

Around the world, consumers and businesses are increasingly turning to digital solutions to speed up processes and make life more convenient

As Motor Finance found out, German motor finance captives are ahead of the game, and a number are already heavily invested in the process of digitisation

“Digital sales channels are a significant growth provider,” Mercedes-Benz Bank tells Motor Finance.

According to AKA research, over half of German customers (52%) could imagine ordering a future vehicle directly on the manufacturer’s website, while 40% of respondents would be interested in concluding the matching financial service directly online.

Major captive banks, like Volkswagen Bank and Mercedes-Benz Bank, have already launched portals that offer their services through a digital channel.

Volkswagen Bank’s portal Leasingbörse offers a leasing product for young used cars. Bandmann says that customers on the portal can filter the number of vehicles according to monthly cost.

“What the customer then does is reserve the vehicle and choose a dealer using the ‘dealer locator’, which is also installed on the internet site,” explains Bandmann. “After that, the customer sets up an appointment at the dealership and the dealer formalises the leasing contract.”

Bandmann says the primary goal of Volkswagen Bank when it looked at online sales channels and digitalisation of its business was to do this hand-in-hand with its German dealer body. He adds that all parties involved will benefit from this.

As to the reasons behind Volkswagen’s decision to launch this portal, Bandmann says it is to increase leasing business.

“We wanted to increase the percentage of leasing because we see advantages for the manufacturer and the dealer body in this finance product compared to pure financing or even balloon financing,” says Bandmann.

Mercedes-Benz Bank says the company’s goal from the digital channel is to provide information and tools concerning financing and leasing products to its customers from the beginning, so they can choose the product that best fits their requirements.

“In the next step customers can individually arrange and calculate their financing or leasing product according to their wishes and the dealer can propose a customised offer fitting their needs,” writes Mercedes-Benz Bank.

In both cases, the dealer remains the final point of contact where the customer goes to finalise the contract.

Despite simply offering a leasing product through Leasingbörse, Volkswagen Bank found that 80% of contracts generated from this channel also include additional services such as insurance and extended warranty.

Bandmann says: “One main aspect of our 10-year strategy is that we want to offer every product that is today offered exclusively through the dealer bodies through digital sales channels. That doesn’t necessarily mean that we will bypass the dealer body.”