May 2024
News from Auto Finance Summit East 2024
Whether increasing deal efficiency or automating credit decisions and assessing risk, AI and machine learning are core to how auto lenders innovate today and plan for the future.
Advances in technology, however, often come with risk.
From fraud to potential financial losses, auto finance industry players are working through the risks to find the rewards AI and machine learning offer. And an eagerness to embrace digital innovation has prevailed despite the risks at hand.
Gaining efficiency through automation, improving customer experience with AI and implementing best practices for credit decision-making were predominant themes during Auto Finance Summit East 2024 in Nashville, Tenn., earlier this month.
Consumer Portfolio Services is focusing on document automation to improve efficiency and prevent fraud.
Machine learning, artificial intelligence and e-contracting strides during the past 12 to 18 months are allowing Consumer Portfolio Services to save time reading about 26 document pages per contract, Teri Robinson, executive vice president of sales and originations, said at Auto Finance Summit East 2024 in Nashville, Tenn.
“We started with automatically turning down deals, because that was the easiest automation to start,” she said. “Then you start doing the harder part — what are we going to approve automatically? The department built the score model. … We shrank our credit department and now we’re 99% automated [on loan decisioning].”
Chase Auto could expand its credit buy box to meet consumer demand if macroeconomic conditions continue to contribute to weakening credit performance.
Consumer need and the desire to grow its auto business are some drivers behind changes to JPMorgan Chase’s auto lending criteria, Leslie Wims Morris, president of private-label captive finance at Chase Auto, said during a fireside chat at Auto Finance Summit East 2024.
“We are a premium lender. … We don’t play in the subprime lending end of the spectrum. That said, could I envision a world where we start expanding our credit buy box? Absolutely,” she said. “There are definitely returns [on auto lending]; it comes down to how you price it.”
American Honda‘s certified pre-owned vehicle sales growth outpaced the industry average as the company expanded the program to incorporate older models.
Honda and Acura certified pre-owned (CPO) vehicle sales increased by more than 16% year over year to more than 340,000 units in 2023, Dan Rodriguez, senior manager of auto remarketing and fleet operations at American Honda, said during a presentation at Auto Finance Summit East 2024 in Nashville, Tenn.
By comparison, industrywide CPO sales grew 7% YoY in 2023 to more than 2.6 million units out of over 35 million used vehicles sold during the year, Rodriguez said, citing Cox Automotive data. Honda is expanding its program by including models that are up to 10 years old, Rodriguez said.
Toyota Financial Services was once again the largest auto lender by outstanding volume in 2023 as the auto finance industry overall grew despite a decline in originations.
TFS had $114.5 billion in loan and lease outstandings at yearend 2023, up 4.5% year over year, according to an Auto Finance News analysis of the latest Big Wheels Rankings data.
TFS originated $65.6 billion in loans and leases in 2023, up 10% YoY.
The Big Wheels Rankings are now available as a component of the Big Wheels Data Service, with data sets spanning underwriting, volume, pricing and capital. These rankings provide the only tabulation of the top 100 auto lenders by originations and outstandings.