Auto Finance costs could drop sharply with Gen AI adoption: Report

According to a report by McKinsey & Company, Generative Artificial Intelligence (Gen AI) can greatly change the auto finance and leasing industry. It can help companies save money on operations and work more efficiently.

Generative AI (Gen AI) can do more than just help customers. It also helps companies make better decisions, find useful insights, and improve processes across the business. The report noted that, if used well, AI could solve old problems and change how the auto finance and leasing industry makes money.

The report also says that Gen AI could cut operating costs, which are usually around 60 per cent of a company’s income, by 5-8 per cent. This means companies could spend less while earning the same money.

“Gen AI could reduce cost-to-income ratios by lowering operating costs (which typically represent about 60 per cent of income) by five to eight percentage points,” the report read (as reported by ANI).

To get the most out of new AI technologies, leasing players can deploy agentic systems, that is, autonomous systems that leverage AI and machine learning (ML) to perform specific tasks.

The report suggests that auto finance companies can use four types of AI agents to improve their business:

• Remarketing Agent: It uses AI to predict vehicle returns, plan them efficiently, and study market trends to give insights for better remarketing.
• Service and Operations Agent: It handles customer service tasks. AI and humans work together to examine how dealers, garages, and insurance claims are handled.
• Procurement Agent: It can identify unexpected costs, suggest changes, and generate reports for people to check.
• Sales and Pricing Agent: It can contact customers with offers and make reports to control costs for maintenance, repairs, and insurance by spotting unusual claims or dealer spending.

The report notes that companies can start using AI in remarketing, as improving pricing across sales channels gives quick and high-impact results. These AI agents in auto financing companies can work faster, spend less, and help employees make smarter decisions.