This snapshot is the second in our Embedded Finance Vertical Snapshot series, focusing on the automotive dealership, repair, and car wash landscape. The automotive industry is highly complex with high software penetration (95% of companies use software to manage at least part of their business). However, embedded fintech adoption varies. While payment acceptance is relatively mature, we see substantial opportunity, especially in payouts and lending.

1. Vertical Definition

2. Vertical Spend

General Commentary & Highlights

• High software usage: The automotive industry is very dependent on software. 95% of companies use software to manage at least one part of their business in US and EU.
  
• Consolidated list of providers: Most dealerships rely on dealer management systems (DMS) for end-to-end business management. Various point solutions also exist to service specific functions or business areas. 
• Tender Mix: Vehicle financing is largely un-addressable by PSPs, but remaining serviceable payment opportunity, is large, and card-centric (credit + debit covers 75% or more in the US and EU). This pool of volume largely originates from the service lane.
• In-car payments: enable drivers to transact directly from their, are seeing increased adoption; however, usage remains largely confined to car washes and has not yet extended to repair services. 

3. Vertical Dynamics

4. Leading Software Platforms

5. Embedded Fintech Maturity

Embedded Fintech Highlights

• Vehicle financing generally not monetized by PSPs or SaaS: Roughly 85-90% of a dealer’s purchases involves financing, which resides on independent systems and lenders.
• Room for product expansion: Payment acceptance, consumer financing, and insurance are embedded by most platforms in the US and EU. Beyond these products, there are natural opportunities including payouts and lending.
  

Please do not hesitate to contact Peter Taylor at Peter@FlagshipAP.com, or Sal LoBiondo at Sal@FlagshipAP.com with comments and questions.