online F&I - Dealership Corridor

Contributing Author:
John Stephens
Executive Vice President
EFG Companies

Can you remember the last time you walked into a fast food restaurant and they filled your drink order? It was a short few years ago when the restaurants started handing you a cup and you dispensed the ice and your drink of choice. The shift happened as consumers demanded a better, quicker experience. Now, order kiosks are being introduced to eliminate further wait time.

While established dealership vendors have built iPad and Docupad platforms to improve the overall customer experience in the transition to F&I, this segment of F&I technology is about to burst with robust competitive offers. Startups are now beginning to appear on the scene with full online financing capabilities. In addition, manufacturers are now investing in online financing technology.

In December of last year, AutoNation launched its first online financing offering, allowing customers to value a trade-in vehicle, determine payments and apply for credit.

In June, CarMax, Inc., the biggest U.S. used car dealer, announced the rollout of a new online financing initiative to help customers pre-qualify for financing before entering the dealership.

In October, Automotive News reported on a dealership in California that was using Express Storefront, an online-buying platform from Roadster that allows shoppers to select a vehicle, get approved for credit, sift through F&I options, and set up vehicle delivery.

Even Equifax is dipping their toe in the online financing product market. This past month, John Giamalvo, the vice president of dealer services at Equifax, spoke at the National Remarketing Conference, discussing his company’s soft-pull tab that allows customers to get a free credit report without affecting their credit. In his presentation, Giamalvo stated that he sees growing evidence that car shoppers are ready to do more of the financing process online.

Also in November, a partnership between Drive Motors, RouteOne and Dealertrack made headlines with a collaboration that resulted in an online checkout feature for dealership websites. The feature allows customers to structure their deal online before finalizing and taking delivery of the vehicle. This creates a 24/7 sales funnel, where customers submit their information at any time of day or night. The information automatically populates into the dealership’s Dealertrack and RouteOne platforms, saving an enormous amount of time in the store.

Contributing Author:
Gabe Aldrete
Vice President
EFG Companies

Bob Dylan said it best – “If your time is worth saving, then you better start swimming, or you’ll sink like a stone.”

We’re over 10 days into the 4^th quarter and the news is out. According to Business Insider, analysts expect the year to close out at 17.5 million vehicle sales. Automotive News recently stated that in comparison to last year’s growth, 2016 represents a flat market in terms of vehicles sold, revenue and profitability. Overall, the industry is still healthy. We are still at the peak of auto sales. And, dealers are still very profitable.

However, while dealers have benefited from six years of growth, the positive trends that kept vehicle sales momentum going are puttering out. The pent-up demand that everyone was talking about in 2010 and 2011 is virtually gone. After extensively broadening credit standards, lenders are starting to pull back from subprime. In addition, lenders are concerned about extending credit terms much more without affecting loss ratios.

Dealers who’ve been around for a decade or two are used to the cyclical nature of the industry. Any dealer worth their salt knows that when you get into challenging times, it’s time to look at other streams of revenue. Through the last recession, dealers became very good at pre-owned sales, service, and finance. Now is the time to take those skills and hone them even further. For example, used-vehicle prices are falling once again as a surge of off-lease vehicles enter the market, creating a greater demand for used than for new. It could be time to once again evaluate your floorplan to better determine your ratios of new to used vehicle inventory.