In certain economic-recovery scenarios, lenders could “play a more active role” for consumers as “trusted advisers,” helping to generate new leads for retailers as the economy recovers, said the report.
While there were signs the pandemic could lead public-transit-wary consumers to dealer showrooms, the economic slowdown could keep some potential buyers out of the market, said Uykur. That means the industry faces a “big affordability challenge for those buyers as the effects of the pandemic-related economic slowdown continue to manifest over the next couple years.”
Lenders, he said, will play a “heightened role ... to provide affordability advice and create solutions for individuals who might not have large down payments, for example, or who might have less monthly cash available to spend on their mobility needs.”
As a result, auto lenders might soon offer new tools designed to “enhance advice capabilities,” which would help to attract customers and reduce the risk of defaults, the report said.
In the long term, what the industry does to attract those buyers — or whether it attempts to at all — remains up in the air. Lenders might eventually offer “non-traditional financing options” to entice buyers who would have chosen “less expensive options” such as transit before the pandemic, the report said.
But in other scenarios, lenders could “materially shrink their credit box and increase lending requirements,” which would result in more customers “unable to access vehicle financing.”
Grant Simons, head of RBC Automotive Finance, said the industry could provide more options to consumers on approved terms and payments, “rather than a binary yes/no.”
“We clearly see the shift toward digital retailing. Those retailers and their financial partners [that] can incorporate advice with an exceptional and seamless client experience will earn a greater share in the future,” he said.
Online shopping may circumvent the role of F&I managers, Uykur said. Unlike mortgage customers who shop around for the best lending rate, online car shoppers are “very unlikely to compare different lenders when they look for an auto loan.” But Scott
Morrison, president of Nissan Canada Finance, said the company continues to see a role for traditional F&I personnel and products, even as it has begun to offer customers the ability to sign contracts digitally, among other recent changes.
“We believe that all parties can be served in a digital environment and we are currently working closely with our dealer partners to integrate key F&I products into the online sales channel,” Morrison said in a statement to Automotive News Canada.
Tim Reuss, CEO of the Canadian Automobile Dealers Association, said the pandemic has proved that the industry and the relationship between lenders and dealers are capable of changing. He cited the industry’s willingness to waive “wetink” signature requirements as showrooms were shut down and car buyers shopped from home.
“That was unheard of before the crisis,” Reuss said. “They realized they were able to do something in a few weeks that before the crisis they thought would take years.”