Toyota leverages high credit ratings to offer better leases

Article by Anita Panait, on October 28, 2013

Toyota Financial Services is leveraging Toyota Motor Corp.'s AA- credit rating and cash to offer low rates and keep customers coming back. Since the carmaker’s credit rating is higher than General Motors and Ford Motor Co., Toyota Financial Services could offer more loans and may even take on riskier borrowers.

Toyota Financial Services manages more affiliated dealers' direct loans and leases in the US than any other captive lender or wholly owned finance arm of other carmakers. Toyota likewise employs intense data systems to keep its customer from shifting to GM or Ford. Mike Groff, chief executive of Toyota Financial Services, remarked that their strategy is built around loyalty and retention.

He said that the unit has “deepened” its use and analytics of data to “take better care of customers to encourage them to go back to Toyota and to go back to the seller of the car that they have." The contest for US market share has become tighter as Detroit carmakers are offering very competitive offerings.

However, Toyota's US market share is unchanged in the first nine months of 2013 at 14.4 percent. The health of Toyota Financial Services allows the Japanese carmaker to maintain no-interest loans across its lineup as well as expand the use of low-cost leases as a strategy to entice both younger and lower-income buyers, Bloomberg was told by Larry Dominique, president of ALG Inc.

Topics: toyota, leasing

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