Margin compression is here for the long haul. In 2019 and beyond, dealers will continue to face flattening new-vehicle sales and a growing affordability issue fueled in part by rising interest rates.
What’s more, the Q3 2018 Cox Automotive Dealer Sentiment Index identified credit availability for consumers and competition with other dealers as two of the top four concerns dealers feel are holding back their business. Given today’s tightening landscape, both economically and competitively, dealers are increasingly looking to their lender partners to work with them to do more to optimize processes to increase efficiency, streamline the car-buying experience and ultimately maintain profitability.
The changing needs of the consumer and how they want to buy a car is driving the need for a more seamless experience. Gone are the days where customers are willing to go through a long, drawn-out buying process — consumer satisfaction for how long the process takes at the dealership is now at just 46 percent, according to Cox Automotive’s 2018 Car Buyer Journey Study. Rather, they expect the same easy and technology-enhanced experience they receive across other verticals.
Consumers want to be able to start the shopping and even buying process online and finalize the details in-store. They want to be able to explore finance options, submit credit applications, pencil monthly payments and look into various interest rates online, away from the dealership. However, the ability to fully deliver on these steps for a smoother and faster process is contingent on how lenders integrate with their dealers.
To drive a more streamlined workflow, a starting point begins with lenders partnering with dealers to show up as early as possible in the process when engaging with the customer to help their dealers take advantage of more opportunities from the start. One strategy is for lenders to identify the different ways they are gaining originations and how these are or are not connected. Looking at the organization and makeup of these indirect loan volumes and the technology that supports them is a good place to start. Lenders can then optimize from there.
Furthermore, with the use of efficient tools like payoff quotes connected to title release, dealers can work hand in hand with their lenders to gain titles faster. This helps dealers move inventory quickly while getting accurate information on the title from the lender to ensure vehicle title details are correct. This is critical, as dealers pay an average holding cost of $32 per day, per vehicle that sits idle on their lot. In addition, long-standing proprietary research indicates that vehicles are nearly two times more likely to sell on the first pass through an auction lane when they have titles.
To drive efficiency in the deal completion process, dealers are looking for tools that can support an increasingly digital approach to car-buying, but they need their lender partners to do the same. According to the 2018 Dealertrack Lender Study, 54 percent of franchise dealers are utilizing digital contracting. However, 24 percent of dealers not using digital contracting are waiting for their lenders to offer it. As a result, it’s imperative for lenders to gain an understanding of the value digital contracting can provide to both their organization and their dealer partners. Working with technology providers and their dealers will help deliver the digital experience the customer expects, while also increasing customer satisfaction and dealer loyalty.
Everyone is in it together. By working closely with technology providers, lenders not only will be better equipped to support their dealers, but they’ll also see returns on their end as well.
Everyone wants car volume to continue to stay strong, more used and new originations completed, and customers getting into their preferred vehicles more quickly. These outcomes can be realized with a more digital-forward, streamlined workflow between dealer and lender that is supported by the right technology provider. This approach will ultimately lead to more deals, loyalty and cost savings for all parties involved.
Cheryl Miller is vice president and general manager of Dealertrack’s F&I solutions for both dealers and lenders, as well as the company’s full suite of registration and title solutions.
BMO Harris Bank announced this week that it is partnering with AutoGravity in an effort to streamline and simplify the vehicle-buying and financing process for consumers nationwide.
AutoGravity can connect potential buyers with finance companies and dealerships to provide consumers with pre-qualified finance offers for their vehicle of choice. Using the AutoGravity app available on iOS, Android and the Web, buyers can choose from new or used vehicles, shop by monthly payment amount, browse local inventory, apply for financing and select a personalized financing offer.
“AutoGravity will enhance the car-finance experience for existing and future customers,” said Craig Harter, head of U.S. indirect auto at BMO Harris Bank. “We are excited to tap into AutoGravity’s growing user base, and look forward to serving the needs of car shoppers.”
AutoGravity has attracted nearly 3 million users who have collectively requested more than $3 billion in vehicle financing. The company insisted consumers are becoming more comfortable securing financing options online, and BMO Harris is well positioned to help digital-savvy car shoppers and dealers save time and money.
“BMO Harris Bank is recognized as one of the top U.S. banks in the automotive finance space, and they have strong relationships with dealers across the country,” said Mark Humphrey, vice president of AutoGravity’s Lender Network. “We are proud to partner with them to provide car buyers greater transparency, control and confidence in the purchase process.”
Two developments surfaced on Friday involving Carvana; one involving a serious amount of financing capacity and the other much more light-hearted as an effort to drum up interest in the online used-vehicle retailer.
First the funds as Ally Financial announced it is providing up to $2.3 billion in financing commitments over the next 12 months to support retail contracts from and inventory needs of Carvana.
Also, in celebration of their mutual affinity for e-commerce, Carvana and the characters from Disney’s “Ralph Breaks the Internet” are joining forces throughout a multi-channel campaign to highlight just how fun it can be for consumers to buy a vehicle online in as little as 10 minutes and have it delivered to their door as soon as the next day.
While the Disney movie is designed to bring out laughter, it’s certainly not funny business about the relationship Ally and Carvana have.
In its third year of financing agreements with Carvana, Ally will provide up to $1.25 billion available for bulk purchases, in addition to providing a $350 million warehouse credit facility. The $650 million floorplan credit line includes a two-year commitment and represents an increase of $300 million over the existing credit line.
“This latest agreement builds on the strong relationship we’ve established with Carvana and speaks to our commitment to supporting auto retailers as they develop innovative, digital financing experiences for their customers,” said Doug Timmerman, president of auto finance for Ally.
“Our extensive experience in the auto business enables us to tailor financing agreements that make it possible for our customers to reach their goals, and in Carvana’s case, change the way people buy cars,” Timmerman continued.
In the first two years, Ally had agreements to provide up to $2 billion in financing commitments for retail contracts from Carvana. The funding has helped position Carvana for growth as it works with more consumers.
The latest agreement also includes an increased floorplan credit line and continued vehicle sourcing through Ally’s SmartAuction platform.
“We’re on a mission to change the way people buy cars,” said Ernie Garcia, Carvana founder and chief executive officer. “This newest commitment from Ally gives us increased flexibility in investing in the growth of our company and ability to continue to deliver exceptional customer experiences every day.”
Customers who visit Carvana.com can shop more than 10,000 vehicles, finance, purchase and sell their current vehicle to Carvana in as little as 10 minutes, from the comfort of home or on the go via their mobile device.
Carvana offers as-soon-as-next-day delivery in 81 cities across the U.S. and has vehicle vending machines in 14 cities in Texas, Tennessee, North Carolina, Florida, Arizona, Ohio, Pennsylvania and Washington, D.C.
Carvana leveraging Disney movie in promotional campaign
The last thing any e-commerce company wants is for someone to break the internet. Even if that someone is Wreck It Ralph, himself.
But that’s exactly what he and Vanellope are doing in the highly anticipated Disney movie, “Ralph Breaks the Internet,” hitting theaters on Nov. 21.
Carvana is riding along for an exciting collaboration with the movie.
Throughout November, Carvana advertising featuring Disney’s “Ralph Breaks the Internet” will be all over — you guessed it — the internet, as well as TV, out-of-home and digital channels, including Carvana.com. Fans can tag along and see Ralph and Vanellope breeze through the world of online car buying with Carvana and mark their calendars to see the movie, only in theaters on Nov. 21.
To celebrate the launch of the campaign, Carvana hosted an online sweepstakes for one lucky winner and a guest to attend Disney’s “Ralph Breaks the Internet” Hollywood premiere in Los Angeles, all expenses paid.
Carvana kicked off national TV advertising with a 30-second commercial that combines animation and live-action footage, following Ralph and Vanellope as they go on a shopping spree through the internet and wind up with more than they expect.
The clip can be seen here.
Before the movie is on the big screen, visitors to Carvana.com will be greeted by Ralph on their computers and mobile devices, and will even have the chance to do 360-degree virtual vehicle tours of cars from the movie.
Commuters who pass by Carvana’s vehicle vending machines in the Phoenix metro area — where the company is headquartered — and Orlando, Fla., will also get a glimpse of Ralph, featuring a custom-designed wrap advertising the movie on can’t-miss, all-glass towers.
Digital channels, including social media, display ads and third-party listing sites, will encourage fans to see “Ralph Breaks the Internet” on Nov. 21 and buy their next vehicle online.
“Cars are a central storyline element in both movies, and now that Ralph and Vanellope are entering Carvana’s world, it was fitting that we join forces to showcase how we’re making car buying fun again,” Carvana chief brand officer and co-founder Ryan Keeton said.
“We hope ‘Ralph Breaks the Internet’ fans have as much fun seeing the movie as we did developing the elements of this campaign,” Keeton went on to say.
Of course, auto finance companies want their customers to send payments as dictated by the agreement finalized at delivery. But the latest survey from BillingTree showed that providers realize how they can help their contract holders maintain monthly commitments is changing.
BillingTree recently announced the key findings of its 2018 Financial Services Operations and Technology survey. The results from participants at small to large credit unions, banks and auto finance companies showed continued plans to adopt mobile and automated payment technologies, including payment via mobile apps, text and Interactive Voice Response (IVR).
The report, conducted during the second quarter, found credit/debit card payment acceptance via online portal and automated forms was the most common practice, offered at more than 60 percent of institutions.
The results also noted that utilization of IVR saw a significant increase, jumping to 45 percent compared with 25 percent in the past.
Planned adoption of new technology and practices saw online portal and mobile both tied at around 35 percent each, with text alerts and payments near 20 percent.
A full 90 percent of those surveyed currently don’t use a convenience fee model to offset payment processing costs, and merely 20 percent were considering this practice in the future.
BillingTree pointed out that growing the base of members/customers and member/customer retention were the two top factors respondents cited as critical to growth and profitability for financial services organizations in 2018, consistent with prior surveys.
This year, cost reduction gave up a third-place ranking to new technologies enhancing payment collection effectiveness, followed by software integrations to enable automatic posting.
BillingTree added the rise in the rank of technology and integrations suggests that financial service organizations regard technology as a more important component in their overall business strategy than in prior years.
“This is the fourth Financial Services Industry survey commissioned by BillingTree capturing trends and revealing that most financial institutions continue to trust and adopt integrated payment technology and services,” BillingTree vice president of sales and business development Jason Hiland said.
“Mobile, text and online payments are now expected by consumers/members and offering each channel supports the Financial Institution’s top concerns, consumer/member retention and growth,” Hiland continued.
To request a complimentary copy of the 2018 Financial Services Operations and Technology survey results, go to this website.
TransUnion is leveraging a relationship with one of its strategic partners to cater to consumers who expect results — like the availability of auto financing — to appear within a few swipes on a smartphone.
To meet the evolving needs of consumers, TransUnion recently launched Mobile Offers Now, a solution designed to help financial institutions respond to increasing consumer expectations to be served when and where they choose.
Mobile Offers Now leverages TransUnion’s existing Find My Offer platform to provide consumers with instant access to prequalified credit offers through a simplified, SMS-initiated, mobile experience. The technology seamlessly can integrate real-time credit decisioning with consumer and device authentication, creating a secure, personalized and dynamic user experience.
“To stay competitive in an increasingly digital world, financial institutions know that they need to reduce unnecessary friction and poor experiences to attract and keep good consumers,” said Dane Mauldin, chief product officer at TransUnion.
“Consumers are demanding faster ways to find offers and apply for credit when and where they need it,” Maudlin continued. “With Mobile Offers Now, they may simply text a key word to instantly check for prequalified offers across numerous credit products, providing a path to credit through a completely digital application process.”
Mobile Offers Now is enabled through a strategic partnership with iLendx. The platform is the first release within a turnkey digital lending suite that is fully integrated with TransUnion’s decision technology.
The companies explained these solutions are intended to replace the traditional credit application with an intuitive workflow that takes the consumer from prequalification to funding in just minutes, with the option to deepen the relationship by offering auto, HELOC, credit card or unsecured lending products during a single session.
Based in Texas, the team at iLendx creates innovative digital lending and banking capabilities for financial institutions. As a strategic partner of TransUnion, iLendx, co-developed Mobile Offers Now a platform that can deliver credit offers directly to a bank’s customers through mobile device technology.
iLendx is also the creator of the Digital Lending Experience (DLX), a subscription-based platform for financial intuitions designed to facilitate the origination of auto financing, credit cards, unsecured loans, HELOCs and new accounts opening for checking and savings products.
“This solution will enable financial institutions to quickly expand their digital presence and adopt new channels for attracting and retaining customers who expect technology and convenience,” said Andy Ivankovich, chief executive officer of iLendx.
“Less than 10 percent of banks can originate loans digitally, and many banks face barriers to implementing their own digital platform. The suite of digital lending solutions will help financial institutions reach new demographics, enter new markets and reduce origination costs while boosting their bottom line,” Ivankovich went on to say.
For more information about Mobile Offers Now and TransUnion’s new digital lending suite of solutions, go to this website.
