Transaction time in dealerships is improving, but lengthy buying processes are still a pain point for stores, a survey by eLend Solutions shows. To speed deals and gain efficiency, the company says, dealerships should move F&I to the front of the sales process.
In an October survey of 100 dealerships, 36 percent said they wanted transactions to be completed in less than an hour on average, but only 11 percent of them achieved that goal. The majority of respondents, 79 percent, said completing transactions in less than two hours was the goal, and 42 percent of them achieved it.
That means more than half of the dealerships surveyed have transactions that last longer than two hours. A quarter of them have a start-to-finish time of more than three hours, but that’s a significant improvement from a year ago. In 2015, 43 percent of those surveyed had transactions lasting longer than three hours on average.
The transition time between sales and F&I and the disconnection between online shopping and in-store purchasing are two drivers of the slow transaction process, eLend CEO Pete MacInnis says.
“There are so many bottlenecks in the process today,” he said. Most customers shop for a vehicle online before going to a dealership, but “when the consumer gets to the store, they start all over again. The disconnect is that the consumers want to do more of the transaction online, but the dealer is still looking at [online shopping] as primarily a lead generation.”
Consumers want to negotiate, evaluate trade-ins and learn about financing online. In many cases, they can, but the dealership needs to have that information right when the customer enters the store, MacInnis said.
“If that happens, that’s going to create that connected car-buying experience for the consumer and efficiency at the dealer level,” he said.
Another frequent slowdown to the transaction process is the transition from sales to F&I. “There is so much redundancy that it is very frustrating to the consumer,” MacInnis said.
“Sales and finance need to start together at the front of the shopping process, whether it’s online or in the dealership, which would eliminate that silo process,” he said.
Dealers can improve both issues with pre-qualifications, MacInnis said. eLend’s ID Drive product scans the customer’s driver’s license before the test drive and extracts information from it. “Before they are back from a test drive, the salesman can have a deal ready,” MacInnis said.
In a case study of Huntington Beach Chrysler-Dodge-Jeep-Ram in Huntington Beach, Calif., more than half of customers chose to pre-qualify before the test drive. Those customers were 43 percent more likely to buy than customers without pre-qualification during the test drive, MacInnis said.
Most of them were very creditworthy; the average credit score was 702, he said. “The credit-qualified people bought into that [pre-qualification] would improve transparency and speed the process.”
The dealership survey respondents also said that the time it takes to complete the F&I process is a major obstacle to customer satisfaction.
But if stores introduce the finance process at the beginning of the transaction, they can cut the time in the F&I office by 30 minutes, MacInnis said. By pre-qualifying customers early in the buying process, F&I managers will be able to “take the guesswork out,” he said.
Typically, after the sales associate makes a deal with the customer, the F&I manager has to verify that the customer information is correct, review the credit file and make sure that the finance offer presented by the sales associate matches a lender’s actual offer. “If you move finance to the front of the sales process, you’re going to immediately eliminate 10 minutes between the [customer’s] end of negotiation with the salesperson and going into the finance office,” MacInnis said.