Diamond program propels Capital One
Capital One Auto Finance booked a record $16 billion in auto loan originations last year. Much of that success, says President Trip Hall, stemmed from the lender's Diamond Dealer incentive program, which was launched in 2010.
Hall, 36, became president Nov. 1, 2012, when Kevin Borgmann left to become chief risk officer at company parent Capital One Financial Corp.
Capital One was the No. 7 U.S. auto lender by volume in the fourth quarter last year, according to Experian Automotive.
Hall chatted about Capital One's Diamond Dealer program with Special Correspondent Jim Henry at the National Automobile Dealers Association convention last month.
Q: Capital One is growing.
A: We had a great 2012, with record originations [up 28 percent to a record $16 billion for auto loans]. We don't really focus on that. What I'm most excited about is the quality of the business and the partnerships we've built with our dealers through the Diamond Dealers program.
The program gives them greater flexibility and it allows us to win more share of their business. It was a really successful strategy in 2012. In 2013 we intend to really follow that trend. The key part of Diamond Dealers is that we have a full spectrum of lending, from the very best to very challenged credit.
Has the program put you on the short list of lenders where dealers shop a credit application?
I believe we are on the short list. Competition is good for dealers. Dealers are going to have more options, and they value longstanding partnerships. As there are new entrants, our focus on relationships has us well positioned.
What do the Diamond Dealers get besides high-end loans?
There are several dimensions. The first is service. When dealers send in apps they get a very fast callback, usually within 60 seconds. They also get expedited funding. The service is really fast. And they get flexibility. For instance, we are willing to do more exceptions for Diamond Dealers. We'll work with them considerably more than we will with non-Diamond Dealers. There's also a great marketing program.
Are you growing by signing more dealers or by doing more business with dealers you have?
For the last three or four years the emphasis has been on expansion. Mostly geographic expansion. We will continue to try to sign up the right kind of partners. We want Diamond Dealers to have a real competitive advantage.
Is the goal to have a network of 100 percent Diamond Dealers?
We get the majority of our business ... we have the deepest relationships ... with our Diamond Dealers. We provide a great offering to non-Diamond Dealers as well.
Do you get more than half your volume from Diamond Dealers?
They're already the predominant source of our business. We do business with a majority of the franchised dealers in the country. I would say it's in the thousands. There are a good bit more non-Diamond Dealers.
Is there a geographic pattern to how you've grown?
In 2010 and 2011 we rolled out Diamond Dealers. We piloted Diamond Dealers in certain areas before that. But we already had a nationwide footprint with dealers.
Are you looking to sign with automakers?
We have a small partnership with Mitsubishi. We're always interested in opportunities.
Historically, you've done mostly used-car business.
The non-Diamond Dealers are mostly used. The Diamond Dealers are a more representative mix. The middle end to the more challenged end is more used. The captives are more on the new side. They win a lot of new business. But we're right in there behind the captives.
You can reach Jim Henry at firstname.lastname@example.org.