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Auto Lenders and Securitization Providers Continued Their Adoption of Digital Assets & Workflows in 2022, But Industry Headwinds Could Slow Adoption Rate in 2023

Wolters Kluwer, a global leader in professional information, software solutions and services, announced fourth quarter and end-of-year results and analysis from its Auto Finance Digital Transformation Index, a key resource that tracks the rate at which auto dealers, service providers and lenders are seeing growth in the evolution from paper-based finance back-office processes to digital. Click here to see the complete data report.

According to the Index, auto dealers, service providers and lenders showed a digital adoption growth rate of 56% over the last twelve months dating back to the fourth quarter of 2021. That rate of adoption is significant considering that the U.S. auto industry saw 2022 new sales reach just 13.7 million on the year, the lowest annual total in more than a decade and an 8% decline from the previous year. For more complete context, annual sales had crested above 17 million for the five-year period prior to 2020, when Covid-19 impacted the industry.

“The continued macroeconomic impact in auto purchases is having an effect on the Index’s rate of adoption measure and overall eContract volume, but year-over-year digital adoption still remains steady and positive,” said Tim Yalich, Head of Auto Strategy for Wolters Kluwer. “In looking ahead to 2023 early estimates from analyst firms are pointing to a slight increase in sales activity, but we believe companies throughout the industry are realizing the value and benefit digital resources, assets and processes are injecting into operational efficiencies, regulatory compliance needs, and overall profit preservation.”

Digital Adoption in Securitization Markets

Wolters Kluwer is also offering in this report a spotlight on digital asset and workflow adoption in the securitization markets. As a way of contextual analysis, and based on an analysis of data from Wolters Kluwer, this digital adoption rate has increased 36% over the last five years. While the adoption rate is expected to drag in 2023 based on the challenging automotive market conditions, the ongoing upward trend of securitizations suggests that the trust in digital loan origination and management is well established in the secondary market, with companies realizing efficiency gains in the pooling, auditing, collateralization, and the execution of security exchanges using digital assets.

According to industry data, auto ABS totaled $110 billion in 2022, down 16.7% from the previous year. Industry observers expect auto-specific ABS to remain relatively flat in 2023. Despite this pause in further volume growth, a recent Wolters Kluwer survey revealed that roughly 82% of lender executives said they have plans to digitize more of their securitization processes, paperwork and workflows during 2023.

To learn more and to access additional data insights from the Wolters Kluwer Auto Finance Digital Transformation Index, click here.

About Wolters Kluwer

Wolters Kluwer (WKL) is a global leader in professional information, software solutions, and services for the health, tax & accounting, governance, risk & compliance, and legal & regulatory sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services.

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Genesis Motor and High Line Winter Lights presentation via 360 MAGAZINE.