Why dealers shy away from electronic F&I
LAS VEGAS -- Dealers appear to be in no hurry to adopt trendy technologies such e-contracting, electronic menus or video presentations for F&I products, judging by comments made at last week's F&I Industry Summit here.
"It's a classic chicken-or-egg situation," said Chuck Gucwa, vice president of business development at credit application aggregator RouteOne, referring to e-contracting, in which dealerships substitute online documents for paper.
"Lenders tell me they would develop it if more dealers used it. Dealers say they would adopt it if more lenders offered it. This is going to require a dealer behavior change."
Gucwa said RouteOne is encouraging its dealership customers to write to their auto lenders and ask for e-contracting. "Dealer feedback does work," he said.
The benefits of e-contracting include easier storage and controlled access to sensitive customer data; tighter compliance with legal requirements; and a trail documenting that customers got all the appropriate notifications and signed all the appropriate waivers, Gucwa said.
For mass-market brands, it probably will take action by captive finance companies to get dealerships to change, Gucwa said. "There's a longstanding belief that the captives will push the elephant up the hill," he said.
A couple of luxury-brand captives, BMW Financial Services and Mercedes-Benz Financial Services USA are ahead of the curve in adopting e-contracting and other technologies for use in dealerships, such as iPads for processing lease returns. But even those brands are taking it one step at a time. For instance, Michael Kanzleiter, senior marketing manager for the captive, said this year that one of the company's goals for 2012 is to get more iPads in the hands of dealerships. When the program was launched starting in 2010, the company gave one iPad to each dealership, but many dealerships were reportedly reluctant to buy more at their own expense.
Instead of a video presentation or a self-serve electronic menu, dealers and F&I managers like the routine they're used to, said Tom Wilson, dealer development manager for American Financial & Automotive Services Inc. The routine? "A good menu presentation followed by objection-handling," he said.
American Financial, which offers training and F&I products, is based in The Woodlands, Texas. Wilson is based in Castle Rock, Colo. He said most dealers in his Rocky Mountain region are still preoccupied with having survived the last downturn; they're leery of new technologies and new investments.
After talking with more than 100 dealerships in three states, he said, most dealers see iPads "more as a gadget and less as a tool -- something to watch a movie with your kid on a little screen. But they don't picture it in the working environment."
Representatives for companies that have developed electronic menus and video presentations for F&I products were quick to point out that electronic devices aren't for every dealer.
"I'd say it's [a ratio of] 90-to-10. Ten percent want it, fly to my office and want to see it, can't wait to start using it. Ninety percent are still figuring it out," said Jim Maxim Jr., president of MaximTrak Technologies of Wayne, Pa. The company offers an electronic menu and video presentations.
Nick Sennett, sales and technology manager, for OptionSoft Technologies Inc., which also offers an electronic menu and video presentations, said electronic devices can collect customer information and inform customers about their choices.
They should be seen as a way to put to use the "dead" time the customer spends waiting for an F&I manager and not as a replacement for a traditional F&I manager, he said.
In a separate panel, Joel McGlamry, vice president of finance operations for Hennessy Automobile Cos., which has 11 dealerships in and around Atlanta, said his dealership group can e-mail a menu of F&I products to online customers, but it's not his first choice.
"We don't like it, but we do it out of respect to our customer," he said. "Face-to-face, one-on-one interaction seems to be the key to our success."
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