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The captive finance arms of Ford, Nissan, and Toyota have
announced assistance programmes in the United States and Canada to
provide relief for customers financially impacted by the
coronavirus disease 2019 (COVID-19) virus outbreak. The schemes
have been introduced by Ford Credit, Nissan Motor Acceptance
Corporation, and Toyota Financial Services and, depending on the
programme, customers may delay payments on new-vehicle purchases or
leases or change payment due dates. Ford, Nissan, and non-captive
automotive lender Ally Financial are offering customers who buy new
vehicles the option to delay their first payment for 90 days. Wells
Fargo Auto is also reported to be offering an assistance programme.
Toyota has been particularly active in introducing such programmes,
offering one earlier this month for customers impacted by tornadoes
in early March in Tennessee and another one following a US
government shutdown in January 2019. According to an Automotive
News report, Nissan is also offering financial relief to dealers,
lowering the costs of carrying inventories as sales are expected to
slow amid the COVID-19 virus outbreak. Ally Financial lends to
dealers as well as consumers and reportedly said that it is
"actively communicating with our dealer partners to support their
individual needs". General Motors is offering zero interest on
84-month loans, as well as 120-day deferment of payments on new
cars for customers in the top credit tiers. The company will also
offer complimentary OnStar crisis assistance services and 3 GB of
data. The company's existing Shop-Click-Drive digital tool also has
an optional home-delivery programme for participating
dealerships.
Significance: The motivation behind these
assistance programmes is to reduce financial anxiety for customers
considering a new-car purchase, as well as to ease the concerns of
existing customers. As US consumers are increasingly uneasy about
growing closures of schools, cancellations of events of more than
50 people in some locations, work-from-home solutions instituted by
employers, and job losses (temporary or permanent) as businesses
are asked to close for certain periods, these efforts may encourage
potential buyers who may be hesitating to go ahead with a purchase.
During the 2008-09 recession, a similar scheme was used effectively
by Hyundai. Hyundai and Genesis announced a programme on 13 March
2020, focused on easing the minds of new-vehicle buyers. These
moves may serve to increase opportunities for stronger brand
loyalty, and to some degree are likely to result in relatively low
risk of payment default in the near term. The programmes do not
absolve the customer of the debt but serve to ease anxiety over
making payments, over potential penalties for late payments or over
increased charges that would typically come with a missed payment.
The hope is also that providing this relief may prevent a
customer's account from sliding into default.
Posted 17 March 2020 by Stephanie Brinley, Principal Automotive Analyst, S&P Global Mobility
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