Auto and equipment servitization financing models

It’s time to move beyond traditional financing

Many bank-owned auto and equipment finance providers and manufacturers’ captives today still rely exclusively on traditional financing. They finance an asset, and the customer commits to paying a fixed amount for a fixed term. However, customers now prefer more flexible full-service solutions—making traditional finance offerings less relevant in today’s market.

Servitization of auto and equipment financing is a more responsive approach to a dynamic marketplace. It represents a fundamental shift from a ‘build it and sell it’ mindset. Instead, it seeks to optimize the customer’s experience with the asset.

Customers can appreciate benefits such as:

• Flexibility and variability
• Convenience and one-stop shopping
• Multi-channel engagement
• Cohesive end-of-lease experiences

Meanwhile, auto and equipment financiers can propel their businesses forward and gain:

• Increased cash flow and the release of working capital for other business initiatives
• Enhanced competitiveness and productivity, and faster time-to-market
• Improved infrastructure and innovation
• Less harm to the environment and more responsible economic growth

Making the shift has wide implications

The shift to a servitization model of financing goes well beyond having the right infrastructure in place. Our experience indicates you should also consider the following key aspects:

• Customer financing and accounting. Shift your focus to solution financing that includes assets, software, services and subscriptions.
• Pricing. Whether prices are variable or fixed, you’ll need access to consumption data to ensure accurate and appropriate pricing that is transparent and competitive.
• Sales and channels. Servitization presents an opportunity to increase direct sales and work with new ecosystem partners.
• Marketing. Experiences are key and should be designed to respond to customer needs over the entire lifecycle.
• Customer success, service and support. People holding new ‘customer success’ roles see service as a core offering; they can help to drive adoption and usage.
• Product engineering. You’ll need to embrace continuous agile delivery, testing, customer engagement and data-driven feature development.
• Technology. Servitization models require real-time data collection and analytics at scale.

Take your first steps on the path to servitization today

We have developed a set of key steps to guide your servitization journey:

If your organization wants to move beyond a traditional financing model toward one of the four servitization models of the future, the good news is that you don’t have to go it alone. We’re here to help. To find out more, get in touch with one of our specialty finance experts.