With profit margins on car sales slim – and getting slimmer all the time – finding ways to streamline the retail process means that dealers are looking for ways to spend less time on operational tasks and more time building relationships with customers. That includes streamlining their partnership with lenders by finding ways to increase throughput and reduce delays. Key funding benefits such as speed, convenience and efficiency are now top of mind – even over the price they pay for lender services.
In fact, according to the J.D. Power 2015 U.S. Dealer Financing Satisfaction Study, overall dealer satisfaction scored 913 (out of 1,000) when using eContracting, compared to 856 when working with lenders who did not use that type of technology. “Speed of funding has become a critical differentiator in the eyes of the dealer as efficient cash flow is demanded by dealer management, not absolute finance and insurance income,” said Michael Buckingham, senior director of the auto finance practice at J.D. Power. The study also found that dealers are willing to pay a premium for that kind of service: Sixty-three percent surveyed were willing to “pay an additional 0.50-0.60 basis points on their loan terms (down 4 percentage points from 2014) to receive good service from their lenders in the prime retail credit segment.”
The results reflect the rate of adoption we’ve seen at Dealertrack this year, with nearly a 20 percent increase in eContracting use compared to last year alone. Recent Dealertrack surveys indicate 98 percent of those using the software plan to continue it, while 93 percent would recommend it to other dealership staff. The reasons are compelling:
- eContracting takes the funding process from days to hours, which cuts interest expenses and improves cash flow.
- F&I staff are finding that completing the contract is easy, since many of the fields are automatically populated with information from the approval — or the dealership DMS system itself.
- eContracting improves accuracy by using internal checks and balances; that helps reduce contract kick-backs and eliminates the need to recontract.
- Dealertrack has recently enhanced the eContracting process by adding mobile review and sign functionality. It’s an affordable, tablet-based approach that further increases efficiency and convenience.
J.D. Power’s 2015 U. S. Dealer Financing Satisfaction Study reveals a changing automotive retail landscape, and an evolution in the partnership between dealers and lenders. Digital efficiencies like eContracting and other tools are creating a premium level of service that in turn enables dealers to do what they do best – sell cars and create lasting relationships. As a part of that, Dealertrack eContracting reduces the amount of time it takes to get the deal done, and as a result, is transforming the automotive retail experience. In today’s fast-paced world of automotive retail, it’s a great way to reap the reward of time, and focus on the things that matter most.