Why industry's trudging tech rep no longer applies

Auto dealers and lenders have a reputation of resisting change, especially when it comes to technology.

But maybe that reputation is undeserved now. The march toward digital operations in the F&I space is picking up, with electronic contracting and starting the F&I process online.

E-contracting grows

For years, e-contracting has been on the horizon without much movement. Now it’s happening, with the captives and product providers getting ready for a consumer demographic that expects electronic documents.

Nearly half of automakers’ captive finance arms have adopted e-contracting. Industrywide, just more than a quarter of auto lenders support it, according to J.D. Power’s 2015 U.S. Dealer Financing Satisfaction Study.

E-contracting isn’t standard industry practice yet, but it has grown significantly. For example, dealerships using RouteOne’s e-contracting program did 300,000 e-contracts in 2012. That number is on track to exceed 2 million contracts by the end of this year, COO Brad Rogers told Automotive News in June.

Two years ago, about half a dozen finance sources supported e-contracting, Todd Mason, chief product and marketing officer at Route One, said in June. In 2014 that number doubled. RouteOne is expecting 22 to 24 finance sources to support e-contracting by the end of this year.

RouteOne’s e-contracting program is already an option in all Ford, Lincoln, Toyota, Scion and Lexus stores. The company doesn’t e-contract the entire deal jacket, but the retail installment sales contract and lease agreement can be done electronically. RouteOne is also close to developing a program with GM Financial and Chrysler Capital.

F&I online

Online financing functions have increased, too.

Scion recently started a pilot program enabling customers to apply for credit and get approved online, and Toyota is next.

Toyota and Scion join a list of automakers, dealership groups and lenders that are embracing online financing functions.

Sonic Automotive starts the financing process online, and AutoNation is preparing for online financing. AutoNation has delayed its program, which would enable customers to finance and buy a car online and electronically sign the paperwork from home, to the first half of next year.

Consumers can even preview F&I products online. AutoNation will begin selling F&I products online next year. Later this year, though, customers will have online access to educational information on F&I products.

And General Motors’ brands have a program called Shop-Click-Drive, which lets customers learn about F&I products and handle much of the transaction online.

Nationwide Mutual Insurance Co. this year launched a service, called Car Buying Reinvented, that preapproves consumers online for a certain amount of financing before they complete the vehicle purchase. It also offers the company’s GAP product online.

The list of options consumers have to finance their vehicles online is certainly expanding, and lenders and dealers are latching onto electronic contracts. There’s room to grow, but technology advancements are happening in F&I. And, they’re happening fast.

You can reach Hannah Lutz at hlutz@crain.com

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