How much longer do you think that Auto Finance has before it’s stripped down, sold, or shuttered all together?
We exited the direct lending arena a while ago and now only lend via the finance offices at the dealerships in our network. With supply chain issues for parts and inventory, as well as reduced demand because of inflation, stagnant wages, and impending layoffs, it seems like a high risk profit drainer at this point.🤷🏻
Not long, net income is down YoY for auto finance.
Lotsa words but no evidence...
Add Kristi fercho to any time and you will start winning. We are about to start winning in diverse segments and boy oh boy what a difference that will make.
@fbz - thanks for mansplaining! I worked in consumer finance for 25 years so I know how financing a car at a dealership works. Fact is, I could have gone to the local WF branch to borrow the money but the rate ultimately offered via BofA (after I spent 30 minutes declining every cr---y rate the finance gal thru at me) was a full point lower. When it got below 3% (July 2019) I felt that was a fair deal and I wasn’t going to walk over nickels and dimes difference in payment.
Isn't there a new auto campus in Irving, TX?
Mortgage rates were never competitive either, but somehow they kept making deals. Even with the employee "discount" rates are garbage
@yrs+1kFEYYAm if you allow the dealer to arrange your financing, you do realize the dealer determines the rate, don't you? The banks and finance companies that they shotg-n your application to will respond with their rate and the dealer is allowed a markup, can be 2 or even 2.5 % markup. So to say that BofA offered a lower rate is not accurate, the dealer offered you a lower rate for using BofA. Was the approval from BofA at a lower rate than other banks? Possibly. Did the dealer get some other incentive from BofA to sell them the contract? Very possibly.
Auto going by by is already underway and should have some press in early Q2.
I got a way better rate from Bank of America when I was buying a car at the dealership. Never ever take their first offer on financing. My credit score is near 800 and Wells Fargo offered a full percentage point higher that B of A. Soooo yeah, they are not COMPETEing. Maybe they need Kristy Fercho LOL
Auto has been circling the drain for years. The chip shortage made vehicle prices temporarily inflated, which in turn made Auto's revenues temporarily inflated too.
But the shortage won't last forever, combined with other economic factors that could/will dissuade buyers, means Auto will need to find a way to really reinvent itself in the minds of consumers.
It's unlikely to happen, given the lack of progress up until this point in time.
I'd rather see Auto not fail but their 'leaders' weren't chosen for their proven ability to transform an organization. They were chosen to occupy a square on an org chart in a stylish way.
Wells would be smart to reenter the direct market, albeit in a completely different manner than before (very heavy marketing, dedicated modern site/app, etc.). Will it happen? Unlikely.