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3 Reasons Auto Lenders Need an Agile Pricing Strategy

Price Optimization, Auto Finance | May 3, 2022
3 Reasons Auto Lenders Need an Agile Pricing Strategy

While predictions for 2022 are cautiously optimistic, it is undeniable that the lesson learned from the last two years is that market conditions can change on a dime. On January 13, Cox Automotive analysts predicted that new-vehicle sales would reach 16.0 million this year. By April 1, that forecast has already been adjusted to just 15.3 million due to continued supply chain issues stemming from Russia’s war with Ukraine and a major earthquake in Japan. Thus, with rates on the rise and macroeconomic factors still affecting the world economy, one thing is for sure – lenders need an agile pricing strategy to thrive in today’s market. Here are just three of the reasons why:

  1. Buyer behavior has changed.

    The days of buyers coming straight to a dealership to blindly shop for a vehicle are long gone. Research conducted by Cox Automotive found that 83% of consumers want to complete one or more steps of the purchase process online, and seven out of 10 consumers are more likely to buy from a dealership if they can start the process online.

    Nomis' near real-time pricing capabilities enable you to deliver multiple offers with optimized amount, down payment, rate, and term combinations through a variety of channels, including digital, to improve responsiveness and increase win-rates.

  2. Competition is stiff.

    The rise in popularity of the direct-to-consumer business model is forcing lenders to adapt. Speed, flexibility, and experience differentiation will be the key for lenders to stand out. For indirect lenders, delivering your best pricing fast is critical. For consumer-direct lenders, offering the best and most streamlined experience to borrowers affords similar advantages.

    With Nomis, you gain valuable insight into customer preferences and can reduce friction for dealers and credit analysts, helping you deliver a fast, simple and differentiated, yet consistent, customer experience.

  3. Margins have thinned.

    Rates are rising along with operational costs. To maintain profitability, auto lenders need to dive into granular pricing to offer the most competitive rate the first time. By adopting back-office pricing analytics, financial institutions can ensure its presenting the best and most competitive offer the first time – while maintaining desirable margins.

    Nomis' powerful machine learning models and modern technology allow you to quantify price elasticity, predict the likelihood of customer conversion and find optimal price points that drive profitable growth, thereby enabling you to align your business goals with your pricing strategy.

Speed and accuracy will be critical for auto lenders this year, and both near- and long-term success will be predicated upon lenders’ use of advanced pricing data, analytics, and competitive intelligence to provide the best rate and offer in a delivery structure that prioritizes simplicity for borrowers and dealers alike. Using Nomis’ competitive market insights and advanced technology, auto lenders can maintain their profitability and risk appetite while putting their best foot forward to the borrower. Contact Nomis to learn how we can turbo-charge your pricing strategy to help you thrive in today’s market.