VW Credit Inc. is rolling out a full complement of electronic finance documents and electronic signatures, an effort that has taken several years to introduce in stages.
CEO Andrew Stuart said so far only a few dealers are using the entire system, which VW Credit calls FinanceSource. He said an electronic contract-validation system is catching on in bigger volume. VW Credit serves the Volkswagen and Audi brands.
Stuart has just ended his tenure as chairman of the American Financial Services Association's Vehicle Finance Division. He spoke with Special Correspondent Jim Henry last week at the AFSA Vehicle Finance Conference in New Orleans.
What's the latest on FinanceSource?
The pilot started the latter part of last year and runs into this year. We have 13 dealerships using the full solution and another 100 would like to do it. Contract validation is slowly growing. It accounted for 31 percent of our deals in December. That includes VW dealers and Audi dealers.
I know e-contracting is difficult to introduce, but the benefits seem so obvious. Is it purely a cost thing?
It's a different process at the dealership. There's always a bit of resistance when you do anything new.
I don't know about others, but for us the improvement is, doing it the typical way without contract validation, about 20 to 25 percent of the time a contract gets sent back for another look. It's got a missing signature or something. Contract validation should virtually eliminate that.
And the upside for dealers is they get funded faster, right?
Yes, absolutely. Dealers get funded quicker and there's also a customer satisfaction aspect since customers don't have to go back if there's something wrong with the contract.
A couple of years ago you said you would be OK with switching to flat fees but only if everyone else did it. Do you still feel the same way?
At the time, the [Consumer Financial Protection Bureau] seemed to be nudging everybody in the direction of flat fees. The feeling was they wanted to get rid of dealer discretion and that was the way to do it. Since then it's not as clear-cut.
Are you making any changes to dealer compensation?
I will tell you we are looking at compensation to see if there's a better way, but before we would make any changes we would, of course, do that in cooperation with our dealers. If we end up making any changes, it will be well thought out.