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Why Pricing Agility Will Be the Key to Auto Lending Success in 2022

Price Optimization, Auto Finance | Mar 14, 2022
Why Pricing Agility Will Be the Key to Auto Lending Success in 2022

The automotive industry has undoubtedly had a unique 24 months. From chip shortages to record low inventory and high demand, times are unpreceded on several fronts. But despite all this, the financing end of the auto industry has returned to pre-pandemic volume levels – a surefire sign competition is back on for auto lenders.

In the recently published Auto Finance Journal article, Prashant Balepur, SVP, Strategy and Partnerships explains:

The competitive outlook for the auto industry only grows when considering the ripple effects of the Covid-19 pandemic. Online auto purchases received a boost in popularity between social distancing and supply constraints. A recent study notes that 76% of shoppers are open to purchasing a vehicle completely online. This figure exemplifies the transformation the industry has seen over the last year—considering just three years ago, a mere 1% of the U.S. had purchased a car online.

Price, monthly payments, and rates are typically the driving factors to a borrower’s decision when financing a vehicle. With the scarce auto inventory over the last year and low interest rates, it’s arguably easier to attain financing before the vehicle. Borrowers can easily find endless financing options in a snap before ever stepping foot into a dealership. Research conducted by Cox Automotive found that 83% of consumers want to complete one or more steps of the purchase process online and 7 out of 10 consumers are more likely to buy from a dealership if they can start the process online.

Borrower expectations, dealer needs and competitive barriers to entry have significantly changed, making speed and accuracy in offer presentment critical for auto lenders. To keep up in today’s market, lenders need to embrace an agile business model to balance risk appetite and growth needs while delivering a great customer, dealer and colleague experience. Adopting hyper-granular pricing analytics coupled with digital access can help you do just that – design and deliver pricing and offers that are competitive and profitable the first time and every time, while gracefully handling exceptions and re-hashes.

Using Nomis’ trio of pricing intelligence solutions – Price Optimizer, Price Manager and Deal Manager – auto lenders can optimize rates, deliver offers digitally and streamline the deal rehash, and exception process enabling them to craft responsive, customer-centric pricing strategies without sacrificing profitability. See how a top 15 auto lender did just that.

Contact Nomis to learn more about how our end-to-end pricing and profitability management platform can help you optimize and digitize your process to navigate an evolving auto lending market with confidence.