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Bank programs could alter dealership-customer relations

Next month, Bank of America will unveil a direct-to-consumer lending platform that shows dealerships’ inventories to BoA’s customers through the lender’s website. Chase Auto Finance rolled out a similar program last year. The programs will likely give dealerships more leads, but could programs such as these hurt dealerships in the long run?

Dealerships strive for and rely on customer loyalty and retention. Many likely appreciate the additional leads Chase and Bank of America’s programs bring, but they may also worry that the programs devalue the relationship aspect of the car-buying experience.

Chase and BoA’s programs are new, but shopping through third-party websites is far from novel. Customers already rely on third-party lead-generating sites, such as TrueCar and Edmunds, to shop for cars. The sites provide leads to dealerships, but in general, they do little to enhance the customer-dealership relationship.

It makes sense for Chase and Bank of America to showcase cars where consumers already are -- online. And the banks are keeping dealerships in the F&I mix. The lenders still pay dealerships a fee for the loan and keep F&I product sales at the dealership.

Both lenders say the programs were designed to bring dealerships more leads and to give the banks’ customers an easy portal to select and finance a car. But if customers begin to rely only on connections such as this, what will happen to the dealership-consumer relationship?

Will consumers continue to find cars through lenders’ or third-party websites, placing no importance on which dealership the car comes from? Or will they use Chase and Bank of America’s portals to find a dealer, establish a relationship and become a loyal customer?

Also, will these programs lead to the sort of “Whose customer is it, anyway?” grumbling that all too often characterizes a tense relationship between dealerships and credit unions?

The initial customer-dealership relationship may stem from a third-party lead, but it will be up to dealerships to sustain that relationship.

You can reach Hannah Lutz at hlutz@crain.com -- Follow Hannah on Twitter: @hm_lutz

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