Finance and Mobility Are Converging in Wonderful Ways

canstockphoto11670858Like so many elements in auto finance, true drivers of economic growth are difficult to discern. Think back to the credit crisis, when it took a beat or two for the White House to realize that the demise of GMAC and Chrysler Financial meant the demise of the auto industry.

They fixed that problem quick quick.

Equally, it is hard to see how the rise of rideshare and carshare is actually the rise of a new auto finance. There is so much focus on the ridesharing and carsharing parts of the equation that the financing elements are hard to discern. Apple Inc.’s $1 billion investment in Chinese ridesharing company Didi Chuxing Technology Co. last week was just the last salvo in an intensifying battle over the future of driving. But those financing elements are there. Oh boy, are they there.

Last week, Auto Finance News held its inaugural Auto Finance Innovation 2016 conference in Fort Worth, Texas. The event highlighted the interplay between the shared economy and finance.

There is, without a doubt, a massive rush to advance mobility, and this is beyond just Uber and Lyft. Alternative business models are sprouting up the world over. Heck, there is even a rideshare venture for electric scooters in Lisbon.

Underneath it all are ventures like Breeze, which offers short-term leases of Toyota Priuses to Uber and Lyft drivers. San Francisco-based Breeze hopes to build a fleet-management platform to increase its lease portfolio and “monetize those vehicles in efficient ways,” Co-Founder and Chief Executive Ned Ryan told attendees at AFI.

This demand for buttresses of financing beneath the ridesharing infrastructure has caught the attention of major captives like Ford Credit and Toyota Financial Services. Chris Ballinger, the CFO and global chief officer of strategic innovation at TFS, said the current mobility revolution offers auto finance its greatest opportunity since the advent of asset-backed securitization in the early 1990s. “I think all OEMs are looking at these kinds of things,” Ballinger told attendees at Auto Finance Innovation. We agree.

This call for financing for mobility means auto finance companies need to do a lot more to get close to innovation. Hyundai Capital, for example, has opened a “digital camp” in Silicon Valley, and this on the insistence of its parent company in South Korea. As is well-documented, Ford has launched a mobility unit, but its focus is on, obviously, mobility, and not necessarily the financing side of the equation. In truth, Auto Finance News is honed in on expanding the reporting of the innovation side of automotive lending and leasing.

But there is more to do to establish relationships with the startup community, to allocate budget to innovation, to create an internal culture of innovation. The opportunity is worth the effort.

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