Captive finance companies that rely on
their parent company’s balance sheet to provide support for
customer lending have seen their importance in the market
transformed, as they become “lenders of choice” for many of their
parent’s customers. Captives have benefited from stable or strong
sales growth in the face of large market declines elsewhere, and
parent companies are now paying increased attention to these
important sales aid tools as a result.
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They also have an advantage over
traditional finance companies: more thorough understanding and
engagement with their customers, both directly and through their
parent – which gives them the inside track in assessing asset
usage, valuation, re-sale and refurbishment. As a result, many
companies without captive operations are now rueing the day they
did not commit to developing this important mechanism for
supporting and enhancing sales.
The author is a partner at The
Alta Group
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