Marsh, Dealing with Risk During the Downturn

Q: What makes Marsh a strong player in the Mexican automotive sector?

A: With 150 years of experience, Marsh is the world’s leading risk adviser, insurance broker and financing solutions provider. In Mexico, Marsh is No. 1 in the automotive sector, with a dedicated team of 170 specialists in this industry: manufacturers, dealers, trucks and fleets. The depth and breadth of our network and experience in financing programs is currently unbeatable in the market. 

Our position as the largest player in the auto risk and insurance industry has given us the capacity to keep on growing, despite the fact that 2019 was a very complex year, with a 7.7 percent drop in automotive sales. 

Q: What tools do you provide to dealerships?

A: Our goal is to deliver the most innovative risk and insurance solutions, as well as the digital tools needed to understand the products and how to sell them. They use our digital platforms, which provide real-time information to facilitate better decisions on what kind of offers to make to a customer, based on the type of car and the type of client. We provide training on the use of these systems and communication materials, so that every salesperson is ready. Having a global outlook helps us to better calculate the correct price quotes and special conditions that apply to particular cars and final clients. 

Car sales come with a package of conditions, which cover both the credit structure, the insurance and extra options for the purchaser. Of course, not all brands are the same. There are volume and premium brands. In the latter segment, the client is willing to pay more so the conditions are better and coverage is optimal. The training we provide to people on the dealership floor is unique to each player. There are only a few players in Mexico who actually do this. Our strength is our ability to adapt to the client. Some still choose to do certain processes manually, so we adapt our solutions to this. Approximately 90 percent of buyers who search for a car on the internet do not buy it online. They still go to the dealer. The sales floor, therefore, remains a place of vital importance.

Q: What is behind the ongoing sales downturn in the domestic market?

A: Twenty years ago, people bought a car for a three to four-year period. All financing at the time was built for that. This has changed, with the purchasing cycle now adapted to five or six years. A longer cycle has had a negative impact on dealerships as car sales have declined. People who are more impatient and want a car for three years are looking at the used segment, which has grown substantially, resulting in a drop in the value of new cars. 
In the US, leasing is much more common and allows people to get new cars regularly with a favorable financial deal. In Mexico, that is not the case. People still buy cars while companies choose to lease. 

Q: What advantages can you offer to clients that work with corporate customers?

A: In the fleet segment, we work with specific clients, of which many are multinationals. Having a relationship with multinationals in other countries helps when they come to Mexico and need a fleet. We can provide the pricing quotes, facilitate the acquisition through our services and offer risk management services. Also, we provide training programs to teach clients how to drive defensively, make better use of GPS systems, and to choose certain routes and certain hours to avoid traffic jams. We are really focusing on better prevention. It is a fact that in Mexico, there is a growing problem with theft. Incidences have grown by 30,000 between 2015 and 2019, which makes training programs very important. 

Q: What is your outlook for 2020?

A: The outlook for the year is in line with the market’s negative trend. Our goal is to help dealerships overcome the challenges and perform well. Returns are now in the aftermarket, as people look to extend the use of their current car or buy a used one. Dealerships will have to offer better discounts and rebates, which will reduce their sales margins. 
 

Marsh is a global insurance broker and risk manager. It is active in more than 130 countries and provides services in multiple industries. In the automotive sector, it works with financing groups and dealership associations.