In order to reduce cost of sales and improve
coverage, many companies use a mixture of direct and indirect sales
channels to supply their end-user customers. When considering the
best way to support their parent companies, captive finance
subsidiaries must take this into account as they devise their
support strategy, as each channel requires a different
approach.

Direct sales are generally easier to address,
as the parent has control of the sales force and can ensure
training, integration into the sales offering and rapid resolution
of any issues encountered. However, they suffer from some
drawbacks, not least of which is the very high cost of sales.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Access deeper industry intelligence

Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.

Find out more

Indirect models can be very effective in
mobilising a much larger team to sell lower value products, or
where geographic and market size constraints are significant.
Captive finance penetration levels are generally lower, although
this is compensated for by greater coverage and lower cost of sales
an indirect model offers.

As both models are well established, there are
a number of methods that have been developed that can drive greater
success. Captives must pay close attention to their routes to
market if are to successfully support their parent company
sales.

The author is a principal at The
Alta Group and former managing director of Key Equipment Finance
Europe.

Alun Richards

GlobalData Strategic Intelligence

US Tariffs are shifting - will you react or anticipate?

Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.

By GlobalData