New competitor in the car financing market? Globes has learned that the Yad2 Group, the private investment company Allied and Bank Hapoalim, are promoting the establishment of a new credit company that will focus on providing loans to the car market and compete with direct financing – the company that controls the market and is traded at NIS 2.5 billion. Yad2’s share in the joint venture, in which a massive financial investment is expected, is expected to stand at 50% while Allied and the workers will hold 25% each.
The field of car loans is a growing field that enjoys the great tide in the car market, among other things following the Corona epidemic that caused Israelis to prefer a private car over traveling by public transport.
Each of the partners in the venture is expected to bring into it its strengths in the areas of automotive and financing, with both Lyd 2 and Allied, led by Chairman Yitzhak Suari, a significant hold in the automotive market, and Hapoalim will bring its capabilities in the field of financing.
Next to 2, an Israeli website that advertises buying and selling second-hand products, there are common boards that connect buyers and sellers of vehicles (along with apartments, animals, etc.), while Allied controls the car importer Champion Motors and the trade-in and used cars Autodil. It should be noted that at the beginning of last year, Bank Hapoalim (the third partner in the venture) and Autodil signed an agreement under which a loan from the bank will also be provided by Autodil’s car agencies without the need to visit the bank’s branch.
The Yad2 website was purchased from Bezeq for NIS 800 million
The Yad2 website was established 17 years ago and employs 260 people. It currently belongs to the European corporation Axel Springer, a publishing company, which acquired it from Bezeq in 2014 for a whopping NIS 800 million.
Champion Motors is an importer of the Audi, Volkswagen, Seat and Skoda brands in Israel. Autodil is one of the largest companies in its field, operates through two main sales divisions: the Trade-In Division and the Private Sales Division and serves as the official and exclusive trade-in representative of the sister company Champion and the Sergeant Group, importer of Fiat, Alfa Romeo and Lancia brands. .
In June 2005, Allied acquired 49% of Autodil’s shares from the chain’s founders, Meir Ohayon and Tomer Dotan, and in October 2019, completed its acquisition of Autodil when it paid NIS 100 million for the rest of the chain, in a deal worth NIS 200 million to the trade-in and used car trade chain, established in 1997. .
Estimate: More than 50% of vehicle transactions – financed
“The field of financing for the purchase of vehicles is growing rapidly due to three main trends,” said a senior market official. “The first is the very growth of the car market in Israel, both in new vehicles and in used vehicles. Second, we are witnessing a cultural change that Boost received during the Corona period, and that is the increase in the speed of recycling of vehicles.
“If in the past the public exchanged cars every four years on average, today cars are replaced at a faster rate, even every two and a half years and this increases the amount of transactions in the second hand market. In addition, there is a significant change in the car mix “More for SUVs and luxury cars. The third and no less important trend is an increase in the rate of use of financing in relation to the total number of transactions,” he says.
Market estimates are that if about 15 years ago only 18% of car buyers used a loan, today the rate of vehicle purchases involving financing is between 50% and 55%.
There are currently about 30 entities operating in the car financing market, with the banks still being a major player in the field, mainly in financing new vehicles. Credit card companies work alongside them and the potential of the field can be learned from Max’s financial statements published last week, which reveal that the credit granted to the public with car insurance was NIS 1.24 billion last year, compared to NIS 964 million in 2020, an increase of 28%.
“In 2021, the company also began to provide financing for used vehicles, second-hand and 0 km. “The company has signed agreements with dozens of agencies and car lots that offer their customers the company’s financing options, along with financing options from financing companies or other banks,” Max noted.
The third type of player operating in the field is finance companies. The largest of these is direct financing, and alongside it operate, among others, ERN and Pama, which is the oldest in the field that has been operating since 1993.
Direct financing showed a 22% increase in car loans
Direct financing reports for the third quarter of 2021 are perhaps the best indication of market growth. The company posted a profit of NIS 142 million in the first nine months of last year, twice the profit in 2020, the corona year in which demand for vehicles fell due to closures. This is an increase of more than 20% compared to 2019, when the company’s net profit was NIS 116 million.
As of the end of September, the direct credit portfolio granted by the company amounted to NIS 3.4 billion (the entire portfolio amounted to NIS 8.4 billion, including loans managed for other entities), an increase of 17% compared to the end of 2020. According to Direct Finance reports, 86% of the portfolio Intended for car loans and these amounted to NIS 2.9 billion in the first three quarters of 2021, an increase of 22% compared to September 2020.
Another figure indicating the market’s confidence in consumer loans and vehicles in particular, reveals that during the past year the share of bonds raised directly from the market to finance its credit sources exceeded the share of credit raised from banks, and stood at NIS 2.2 billion, compared to NIS 1.75 billion raised from banks.
With direct financing you will optimize the results for the rise of the stock. The company was issued in August 2020 at a value of about NIS 1 billion (originally the desire was to issue at a value of NIS 1.5 billion, but the corona hit the issue), and since then the stock has risen by about 150%.
Direct Financing, managed by Eran Wolf, is part of the Schneidman family’s direct insurance group, which owns 46% of its shares. The second largest shareholder in the company is Altshuler Shaham Investment House (14.5%). In addition to non-bank financing companies, leasing companies and car importers also own financing companies. For example, Colmobil owns Colmobil financing solutions, and Albert, Shlomo and Kerso also established financing solutions.
Immediately 2 stated in response that “the company has 20 million visits a month, and it is careful to develop new products and develop technologically in order to provide the best service to its customers. As a result, the company examines daily business collaborations with many entities.” Bank Hapoalim stated: “We do not usually address questions regarding business contacts.” No response was received from the Allied Group.