Financing Solutions for Optimal TCOMon, 09/01/2014 - 13:12
Q: What financing solutions does Daimler Financial Services offer worldwide and in Mexico?
A: Daimler Financial Services offers a broad range of automotive financial services, including vehicle leasing and financing packages, financing services for dealerships, fleet management, as well as insurance packages and banking services. Our products and services support the Daimler Group’s vehicle sales and seek to improve brand loyalty among customers and dealers. We reached a landmark in 2013 when the number of vehicles around the world financed or leased by Daimler Financial Services topped 3 million for the first time. There is a good reason as to why our automotive financial services are in such high demand. First, our financing makes it possible for customers to own their first vehicle bearing the three-pointed star, or get the best total cost of ownership with a Mercedes-Benz bus or a Freightliner truck or tractor. In Mexico, about 60% of commercial vehicles were financed in 2013. Second, thanks to our leasing packages, drivers can trade their cars in for the newest models on a regular basis. And finally, our insurance solutions guarantee that our customers’ premiums are as attractive as their vehicles are safe. On average, in Mexico and around the world, we finance or lease four out of every ten Daimler vehicles delivered.
Q: To what extent does Daimler Financial Services tailor its offerings for different customer profiles?
A: We are focused on many different kinds of customers and we know how to approach each of them. For trucks, tractors and vans, we provide services to owner operators who need between one and 20 vehicles, as well as to companies that need a complete fleet of vehicles to transport different products. For the passenger cars segment, we talk to those looking for a luxury car, like Mercedes-Benz. There is also a special segment, known as customers for new generation compact cars. These are usually young graduates that have started their careers and want their first luxury compact car. They might be looking for a Class A or CLA, or even our newest model, the cross-over GLA. We are able to offer them attractive financing or leasing packages, according to their specific needs and credit profile. When a person arrives to one of our dealers’ agencies looking for a car, we have Finance & Insurance agents ready to advise them about the best financing option. In the passenger cars segment, we can issue a credit pre-approval in around 30 minutes. For the vans segment, we have a three day fast-track approval, while for commercial vehicles, we require an average of eight days since a more complex credit analysis is needed.
We have been in Mexico for 21 years, so we have learned about its market needs during that time. We have changed along with the market over that time. Flexibility is the watchword of all our interaction with customers. Our tailor made financing and leasing plans respond to our customer’s needs. Some of them, due to the way they manage their business or their finances, need a linear plan of installments. Some might need an ascendant installment plan during their credit period, while others need a descending plan, grace periods or extraordinary installments, according to their financial structure or economic situation. To better understand the local market better, we annually check our relation with customers through the Customer Satisfaction Index (CSI) carried out by a third party. This has turned up very positive results since our CSI has been at around 95% for more than five years on a row.
Q: How do operating leases stack up as a financing tool and what is the ideal customer profile for this service?
A: Leasing allows us to provide maximum flexibility. Our leasing offers allow customers to pay for the use of a vehicle rather than its purchase, which means they benefit from low monthly rates and get incentives. Installments can be deductible and accounted for as a rental expense. At the end of the contract period, customers decide whether they would like to switch to a new vehicle. This ensures that they can look forward to the newest models on a regular basis, they do not incur big maintenance costs and they do not need to provide a down payment. This kind of financial product is targeted to the person or company that understands the benefit of not “owning”, but “enjoying” the benefits of only using a vehicle during a period of time.
Q: How do you encourage owner operators to opt for new financed vehicles over older and cheaper models imported from the US?
A: We are aware of the events that shape the decisionmaking of customers within the Mexican market. That is why we customize our financial offer accordingly. For example, when the customers’ economy allows them to look for a used vehicle, we offer them the finance package that fits their needs. This way, we provide our customers with safer vehicles that are not as old as the imported vehicles, fewer maintenance costs and a better image for their company as these units are less harmful to the environment.
Q: Defaulting on loans is a big concern for banks in Mexico. How does Daimler Financial Services view this problem?
A: That has not become a big concern for us, as we know our customers. Knowing our customers allows us to adapt our financial offer to their specific needs, which has created loyalty to our integrated services. Proof of this is shown in our very first Mexican customer remaining our customer today. Auto Express Frontera Norte has been our customer for 21 years. It has been transporting goods, and importing and exporting into different Mexican states since 1974. Today, it has a fleet of over 130 trucks, none of which are older than 5 years.
Q: How do you help raise awareness for the wider Daimler brand?
A: All Daimler divisions know that long-term success requires not only fascinating automobiles and cost-efficient commercial vehicles, but also first class services and financial solutions. That is why Daimler Financial Services provides tailor-made financing and insurance services worldwide. In total, worldwide, we booked about 288,000 new leasing and financing contracts in the first quarter of 2014, a 14% yearon-year increase. In Mexico, over the last 21 years, we have written more than 35,000 contracts. This country represents a particularly strong truck and bus market, with 60% of our financial contracts being signed for commercial vehicles. With a portfolio of US$1.2 billion, our organization here in Mexico is a strong contributor for us within the Americas region. In the last 20 years, Daimler Financial Services Mexico has financed more than 92,000 vehicles.