Aureliano García Valenzuela
Automotive Financing Director and CFA
View from the Top

Green Car Financing a Growing Market

Thu, 09/01/2016 - 13:36

Q: How does Scotiabank participate in the auto financing sector and what are your growth expectations?

A: We have been working with the automotive industry for 17 years and car loans are one of the bank’s strongholds. We are passionate about cars and we know and understand the industry. There has been exceptional growth in the sector and its financing services, especially in the past three or four years and we have yet to hit a ceiling. From January to June 2016 the auto finance industry generated 474,792 contracts and we anticipate sales of around 1.5 million units by the end of the year. Thanks to new financing opportunities, many people are now able to buy new cars and we expect the segment to grow, financing almost 65 percent of cars sold in the country. To distinguish ourselves from our many competitors we have to put in the extra work. Scotiabank offers financial and other services, such as counseling to choose the best option, and designs personal plans based on a customer’s purchasing power. Our objective is to inspire confidence and above all develop an outstanding customer experience. We try to make the process of obtaining credit as smooth as possible, offering our customers every tool they might need to communicate with us through our callcenter, our website or our branches. Scotiabank believes the growth we are experiencing is the result of the trust in financial institutions and the Mexican economy.

Q: What role does brand financing play in Scotiabank’s auto loans strategy?

A: We do brand finance for Mazda but our CrediAuto program is open to any car brand. The growth of brand financing in general has been boosted by the subsidies given by car brands and distribution networks. At Scotiabank, we do not offer subsidies but focus instead on high-quality service. Our customers have many financial options, including access to different types of credit, to design a complete financial package. We also maintain competitive interest rates, enabling people who have never had any banking service to acquire a new car.

Scotiabank has worked and grown with Mazda for over seven years. In the first half of 2016, we allocated 10,243 car loans, compared with a total 8,900 signed in 2015. We have grown 6 percent within brand penetration, which is now close to 40 percent of Mazda´s total sales. We have solid experience as a brand financer and are prepared to work with other brands at any given moment.

Q: What new business opportunities do you expect to come to fruition in the car loans industry?

A: After the pollution problems Mexico City experienced in the first half of 2016, we created a product designed for hybrid and electric vehicles. We provide our lowest interest rate, an environmental bonus deducted from our customer’s credit and unemployment insurance at no extra cost. Customers that choose to finance their hybrid or electric car with Scotiabank can also make advance payments free of charge and there is no down payment needed. Even though sales of electric or hybrid vehicles are not extensive here, they have been growing by 60 percent year on year for the past three years. For the second half of 2016, we expect to allocate 200 loans of this type and we hope this product will experience growth rates of 30-35 percent per year.

Q: How has Scotiabank’s FIU offering affected purchases of car insurance?

A: FIU is our online insurance store and it has been tremendously successful, exceeding our initial expectations. Five insurance companies are working with FIU and in the future we will be offering more options. Insurance companies have been keen to participate and have made competitive and interesting offers. FIU is userfriendly and we accompany clients through every step of the process. Our ScotiaSeguros department is also focused on helping customers with claims, functioning as a link between them and insurance companies. The most difficult hurdle is convincing people to purchase car insurance. Fortunately, car-financing plans that include insurance are starting to resonate with Mexican consumers. Even though Mexico has a very low index of insured cars, we have been seeing an important increase in those numbers. We still have a long way to go, but our efforts to create accessible platforms such as FIU will help the industry tackle the country’s backlog.