The pandemic and related shutdown orders have meant that auto sales fell significantly in early 2020. Global auto sales could fall 12-15% through the year, according to estimates reported by Reuters.
Meanwhile, auto dealers are under increased pressure to close business for a shrinking number of customers. If lenders want to see their profits sustained, they need their auto dealers happy as they navigate tough conditions.
So how can you give your auto dealers a helping hand without compromising on loan quality?
1) Use speed to your advantage
Auto dealers are currently seeing fewer buyers come in. If a new lead does come in, they need to act quickly; taking too long loses opportunities.
Consider what’s at stake in the used car market. According to Automotive News, “used cars five years old or less, the profit [for dealers] was $950. New trucks cleared $540 each, while used trucks five years old or less gave dealers a $1,200 per-vehicle profit.” It’s these opportunities that dealers need help with to close deals more quickly.
Most dealer POS systems cannot display more than one offer from a lender; if you are only able to show one, your dealer may not have time to reach out to you and negotiate a more suitable offer. To stand out, add a link to your dealer portal in the offer notes so the dealer can view more offer options.
For example, you might decide to offer three deals to each dealer. First, you have the main offer displayed front and center in the dealer POS system. In your dealer’s portal website, you might have two alternative options, e.g., one with a lower monthly payment and one with a different upfront payment. On a tactical level, having the facility to show multiple offers can give your dealership an advantage over competitors.
2) Empower dealers to rehash loan variables
Auto dealers often have a customer who is ready to buy until the money discussion comes up. The end buyer will say something along the lines of, “I can’t go ahead with this if you need a $1,000 downpayment.”
While the dealer attempts to get in touch with the lender to discuss other options, there’s the risk of the customer going elsewhere for a quote or abandoning the idea of buying a car altogether.
Further problems arise if the potential customer needs assistance during an evening or weekend. The lender may not be available to respond right away to offer other lending options – and telling the customer to return the next day for an updated loan offer doesn’t cut it anymore.
Instead, offer a dealer self-service portal to allow adjustment of loan variables. This allows the dealer to change the monthly payment, down payment, or term without needing the lender’s involvement in each change.
3) Reduce documentation burden
Auto dealers want to spend their time with customers, not managing records and files or hunting down documentation to close a deal.
Fortunately, dealers no longer have to act as a middle man; they can allow technology to manage this step of the sales process. Rather than chasing the borrower for documentation, lenders can use third-party verification services to collect data. For instance, Equifax offers income and employment verification. You can also use Lexisnexis and Neustarto to speed up these verification processes.
4) Expedite the contract package
Receiving the contract package is the last critical step your dealers need to close deals.
The usual process for this is slow and drawn out for everybody involved. Dealers often ask for employment verification at the start of the process and then ask for identification a few days letter, meaning several delays to compiling the full contract package.
To expedite the process, you want to automate as many steps as possible. There are a few promising solutions for how to do this, such as using digital tools to cross-reference an individual’s address on the application and other submitted documents.
You can also leverage third-party services to receive information on credit, income, and employment, providing a consumer self-serve option when more information is required. We recommend providing a self-serve process that leverages text messages and websites to finalize the package conveniently and securely.
Make your auto dealers happier this quarter by getting expert digital support
There are two main approaches to keeping your auto dealers happy today. The first of which is falling back on traditional methods, like encouraging customer service and management support.
While these measures can improve your business, alone they are not enough to deliver the speed that auto dealers need to close deals in 2020. If you want to present multiple offers quickly, without red tape, and to finalize the contract package painlessly, technology will have you on the fast track to success.