According to the credit reporting agencies, roughly 56 percent of Americans have what can be categorized as nonprime to subprime credit. A recent Equifax report indicated that only 44 percent of Gen Y customers have prime credit, while the rest suffer under the blanket definition of nonprime.

But there’s a catch.

These figures are skewed by the high number of Gen Y borrowers with thin files and high student loans. In other words, everyone gets lumped into the same category no matter what the reason.

This has created a bit of confusion among dealerships in differentiating actual nonprime customers with those who simply look nonprime on paper. As a result, it’s brewed up a perfect storm of discontent among Gen Y auto buyers who loathe the idea of spending hours trapped inside a dealership awaiting credit approval.

Even Gen X customers are growing tired of the same old worn out methods of buying cars. As a result, there’s been a spike in the growth of online services geared at helping buyers through the experience with as little pain as possible.

Old Ways Die Hard

Recently, Penske Automotive Group announced plans to compete with CarMax for the lion’s share of the new market of online used-car sales. Nonprime car shoppers represent the group most likely to benefit from this move, both in time saved and the volume of lending terms granted.

Meanwhile, still stuck in the primordial muck and unwilling to take that first evolutionary step forward are the old-fashioned car dealers of the world. For these dinosaurs, the idea of adapting their way of doing business is about as unthinkable as a T-Rex sprouting wings and taking flight. Their collective mindset expresses one simple, dangerous thought: Gen Y customers will have to adapt to their antiquated methods, or take it elsewhere.

This lack of willingness to evolve — to work out ways of bringing speed and ease to auto buying transactions — isn’t surprising. These voices of the past have been wielding the “if it doesn’t fit, force it” mindset for ages.

But where will these same creatures of habit be a few years down the line when allegations of “strong arm” sales tactics arise from agencies like the Consumer Financial Protection Bureau, filed by customers who felt coerced into buying something they couldn’t afford — all because of a lack of a streamlined, efficient process?

It’s an attitude of defiance and resistance we’ve all seen before.

Back in the old days when menu selling was first introduced, many reacted as if the sky was falling. It was as if they couldn’t wrap their heads around the concept.

They had trouble comprehending why anyone in their right minds would want to embrace a culture of transparency in auto sales.

Change didn’t happen overnight. But before long, those who implemented menu selling realized previously unseen levels of product penetration and before long, there was no looking back.

Current Landscape

Fast-forward to today, where we find ourselves at a similar crossroads — introducing even more new-age concepts that will no doubt turn all those dealerships still clinging to their tried and true methods on their backs.

Making it easier for customers to purchase, regardless of whether they’re prime or subprime, is no longer an issue of “if” but a question of “when?”

Efficiency is the driver of sales. Reducing the time a customer spends buying a car doesn’t just mean profits earned this month or this quarter, but years on down the line, as well.

On the other hand, taking too long to complete the F&I process can result in a lost sales, reduced profits, eroding customer loyalty and legal scrutiny.

Savvy dealers such as CarMax and Sonic Automotive know this. They have seen the pot of gold at the end of the rainbow, and they’re lunging for it, willing to make adaptive changes in order to gain market share.

Although that share today only represents 11 percent, that figure is growing. With more available resources than ever before, car buyers are flocking to the likes of these transparent dealers in the hopes of finding the best deals possible in the shortest amount of time.

Chief among the efforts of the likes of CarMax and Sonic is the understanding that individual customers are more than simply a beacon score. These guys “get it.”

Which leads to the obvious question: if the giants of the auto industry are giving in to customer demand because they see it as a profitable pursuit, shouldn’t this concept cause the doubters to sit up and take notice?

The Bottom Line

Dealerships today can no longer classify buyers as nonprime or subprime based on their beacon scores alone.

Today, a 640 score could represent 10 different variations of credit history. With a growing number of lenders changing their methods to examine individual circumstances — such as thin or nonexistent credit files — the onus is now on dealerships to do the same.

How is this accomplished?

First, by admitting that a change is necessary. Next, it requires the implementation of a streamlined process by which the issue of credit approval is broached long before a customer decides on a particular car.

By getting all those ducks in a row, and by landing customers on cars they can actually qualify for, dealerships can slash away at the extensive amounts of time nonprime customers have to spend on the lot.

In order to make it all come together, dealerships must take a long hard look at their processes and ask themselves some difficult questions.

• Are they adding unnecessary time by landing customers in cars before asking prudent fact-finding questions that can give insight into the buyer’s creditworthiness?

• Is the sales staff trained on the best methods of obtaining standard credit criteria?

• Can methods be employed to bring F&I into the process sooner, rather than later?

• What steps are being taken to understand customer budgets against lender guidelines?

There’s an irony present throughout all of this.

As recently as five years ago, dealers across the country swore up and down they’d never put their inventories on third-party websites. One look around at sites like AutoTrader.com or TrueCar.com shows a very different story today.

Perhaps in another five years, it will be commonplace for dealerships to adapt their processing strategies in a manner conducive to a more streamlined, painless in-dealership experience.

The race begins today. Those who aren’t already toeing the line will be left behind in the dust kicked up by the competition.

Rebecca Chernek, who founded Chernek Consulting in 2001, has nearly three decades of dealership experience ranging from working with her father at their family-owned dealerships in Have De Grace, Md., to district manager for the AutoNation division of the JM&A Group. She can be reached at (404) 276-4026 or via email at becky@chernekconsulting.com.