Navistar Relaunches Financial Services Retail Capabilities
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Truck maker Navistar announced Oct. 4 that its financial services business is reintroducing retail capabilities to serve truck and bus customers.
Navistar Financial is a captive financial services business that provides dedicated loan and lease financing services for truck and bus customers. Those services have been primarily focused on wholesale and parts financing for the brand and dealers. But now retail financing for end customers is coming back after more than 15 years.
“Navistar Financial is quite an old company,” said Koen Knoops, president of Navistar Financial. “During all our history, there has been quite a complete offering both supporting the brand and the dealers with wholesale and parts financing. And on the other hand, the retail financing, so the end customers with leases and loans. And this part of the business had been sold off, you can say, around 15 years ago.”
GE Capital originally took over the retail financing services before they ended up at BMO Financial Group. Navistar continued to partner with these companies to provide retail loan and leasing services. But it eventually got the chance to re-enter the retail space itself after being acquired by Traton Financial Services and Volkswagen Group.
“That meant that we got access again to refinancing means,” Knoops said. “And from a strategic perspective, Navistar wanted to build up that business again themselves. So reopening ... this business of lease and loan to the retail customers is a decision taken about one and a half years [ago].”
Traton is a multibrand finance services provider that offers groupwide captive and integrated financial services. Navistar was acquired by the company at $3.7 billion for all common shares July 2021. Navistar Financial is aiming to leverage those global synergies and years of multibrand experience to service its own customers.
“It’s the opportunity linked to the fact that Traton Group acquired Navistar about two years ago that we want to be back present with this,” Knoops said. “The key thing in that is, one-stop shopping has to make sure that the customer not only gets the vehicle but also the loan and the lease and more related to that bundling of all kinds of services. That’s something that is much easier to set up if you have your own captive compared to when you would work with an external bank partner.”
Knoops also stressed the importance of being able to offer customers competitive loan and lease financing options. That includes fair market value leases to mitigate ownership risks associated with new technologies such as the S13 powertrain and battery-electric vehicles. These capabilities will primarily serve International truck and IC Bus customers.
“Overall, what we are after is to be able to have access to fair market value leases,” Knoops said. “That means that together with our used truck operation, we can give market values, and that’s extremely important that we can do so now that we launch the S13, so the integrated powertrain, where customers would like to step into this new product, and we give them confidence by also giving market values to that product.”
Navistar is also in a better position to launch these services since the company can now attract sufficient funding. Traton acquiring the business meant that its financial rating essentially shot up overnight. That financial stability became critical to being able to relaunch the retail services.
“That’s one thing, the financial stability point,” Knoops said. “The other one is maybe more piggybacking on experiences that have been built up within Traton Financial, that has mainly been based upon the history of setting up financial services in the Scania environment.”
Navistar streamed a launch event for select stakeholders Oct. 2. The company reported there was a lot of engagement during the event and the three months leading up to it while it worked with its network of dealerships.
“The most important stakeholders are the dealers since we have an entirely private dealer network with whom we have kept relations during all this time that the retail financing had been outsourced to BMO since we were still doing the wholesale financing, the parts financing,” Knoops said. “That means we had individual relationships with all those dealer groups and they, of course, were aware that we were going to come back into the retail financing and ... they were really looking forward to that.” Navistar said the structure of the new captive financial services organization will allow it to evolve to best support the development of customer business potential in a transformative transportation and logistics landscape.
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