Editor's note: David McClelland's most recent position at Ford Credit, before becoming CEO, was executive vice president, marketing and Asia Pacific. His previous title was incorrect in a previous version of this story.
DETROIT -- At the halfway point in his first year as Ford Credit CEO, David McClelland has traveled the country to fulfill his primary goal: to talk to as many dealers as possible.
"I've probably met with north of 100 dealers, probably more if you include the larger dealer events and meetings and dinners," he said. "It's just been fascinating to listen to what's on their mind."
Many of them chatted with McClelland about digital retail and financing and customer affordability, he said.
McClelland's most recent post in his 25-year tenure with Ford Credit was executive vice president, marketing and Asia Pacific, a role that he said required him to have relationships with dealers, understand how they sell vehicles and understand how Ford Motor Co. operates.
McClelland, 49, has been at the helm as Ford Credit acquired Canvas, a vehicle subscription company, and invested in fintech company AutoFi. "As I think about the future of the captive finance company, a lot of what I had the time to think about in that [marketing and fintech] role will help me," he said.
During his time with the captive, McClelland has held executive positions in the U.S. and internationally, leading operations for Ford Credit in Asia Pacific, Britain, Italy, China, India and South Africa.
McClelland spoke with F&I Editor Hannah Lutz and Staff Reporter Jackie Charniga last month.
Q: What are the major auto finance trends you are seeing in the market right now?
A: Because of the transaction price and rising interest rates, there's a near-term pressure for extended term. We still are very comfortable with the mix of extended term, which is very little. I'm trying to find ways to solve that customer pinpoint of affordability in another fashion rather than just following the extended term because I think we can actually deliver what we're here for, which is the shorter term, the faster trade cycle.
It's kind of fallen off a little bit recently, but there's also been an increase in leasing. For Ford Motor Credit, we're plus or minus 20 percent, tracking lower than the rest of the industry. It's important that you don't get the mix wrong, which could affect the residual values in the wrong fashion and therefore it becomes unsustainable. The other trend is digitization, whether it's F&I products or the actual sale itself.
How is Ford Credit moving toward the online transaction?
If you think about our world, there's the originations when the customer signs the contract, there's the servicing and then the renewal. On the origination side, there are very few customers that want to go end-to-end online. My sense is there's a general acceptance that that will increase over time.
Dealers entrust their customers to us, and we're passionate about making sure we do the right thing. We look after those customers, and we bring them back to the dealership to purchase or lease another vehicle. So, we're investing in online tools that the customers can use that are ever-increasingly intelligent. We're testing and we're learning, and it's proving to be very successful.
Last year, Ford Credit invested in AutoFi. Can you give us an update on that relationship and how dealers are using the product?
AutoFi's clock speed — the ability for them to iterate and learn and change for the customers — is really tremendous. I've been lucky enough and privileged enough to sit on the board for the last year.
It's quite evident that the product they have today is just much better than the product they had 12 months ago, and I think it will be much better again.
It's going to be really successful when the customer can go online, and finish up in the dealership and have sort of this seamless experience.
The data says the customers that are going through from start to finish are extremely satisfied and just as attractive to the dealer as the traditional customers in terms of F&I products and finance, etc. So, I think we're onto something.
What is Ford Credit's role in the mobility world? How do you envision that role evolving?
Our role is to work with the OEM, serve the dealer, to look after the customers and drive loyalty back to the dealership in this world of brick and mortar.
Think about it in four stages: we're in the first stage, which is digitization. It's artificial intelligence, technologies like blockchain, but mostly the digitization at the moment. So how do we get to the front end and digitization of the sale? How do I get the self-serve and how to make the end, the renewal seamless?
Then as vehicles get connected, that will impact our business in terms of our core products — our retail, and our lease and our wholesale products — because there's residual data that's available for the vehicles. We've become significantly valuable to the OEM as we think about that transition period, and we can work together to make sure we're not too aggressive, too pessimistic on future values. These are really critical times, and you'll see it again when electrification comes in. You'll see the role of the captive being critical to work with the OEM to make the right finance product available, to make the vehicles affordable to customers and take the right position on residual values.
And then you get to the fourth of my stages, and that's the autonomous world, which is much more difficult to talk about. But still, you've seen the announcements that Ford made about autonomous vehicles. Ford Credit is lock-step in terms of our role in the future world that Sherif Marakby, president and CEO of Ford Autonomous Vehicles, is leading.
Can you give us an update on Canvas' progress?
We're clearly attracting a different person to the brand. These are used vehicles. It's harder to make economics work on a new vehicle yet, but I think that's possible in time. But on used vehicles, just because of the economics, you can get to the right price point. We see customers — the vast majority that are new to the brand. They're younger. They've got very good FICO.
We've got nearly 1,000 customers active, and they've driven a lot, which means we've learned a lot about what they like and what they don't like.
We're learning about remote delivery, remote document execution. We're working with the dealers in the Bay Area and in Los Angeles to learn about how you put the vehicle through the dealership for service.
I'm able to learn, and I want to get it right. I can then look at how to get to scale. I can see there's an asset in working with the dealers obviously when we get it right.
As new-vehicle ownership models emerge, what do you expect the dealers' roles to be in the future?
Because of the way they serve the customer and the footprint they represent, they will be an extremely important partner for us into the future. Our role is to find the products and services and to evolve those products and services to make sure that we, the credit company, give our dealers those services and products that continue to allow them to be as competitive tomorrow as they are today.
That's basic and fundamental. If we get that right, this wonderful relationship we have today can be wonderful again in five years and in 10 years.