Auto lenders looking for insight on whether a dealership could be about to default on a loan — or even go out of business — could learn a lot from the retailer's website.
That's the business proposition of General Forensics, a San Diego technology company that regularly scans dealership websites and other online sources for signs of trouble. According to the company, its clients include several major auto lenders, which receive advisory services and data reports aimed at protecting them from risky dealership partners.
General Forensics CEO Josh Wortman told Automotive News that auto lenders want assurances that the dealerships with which they do business are financially healthy. Wortman was working on a startup investigating real estate agents for the mortgage industry before he was approached by an auto lender that he declined to name.
"It didn't take long to realize there wasn't a lot of data at the salesmen level, but we could find some really useful things about car dealerships by looking at their websites and at the websites of state agencies licensing the dealerships to do business," Wortman said.
In addition to lenders that issue vehicle loans for consumers, General Forensics also works with floorplan financing lenders, auction companies, warranty companies, government regulators and other legal entities, Wortman said. He wouldn't disclose any client names.
Signs of trouble for a dealership that Wortman said General Forensics can detect include:
- A dealership website going offline: This could mean the dealership is not paying its bill for website services. "If it's not fixed in a period of time, someone's not paying attention," Wortman said. "If they're not managing their marketing efforts, then something's up."
- Inventory levels dropping dramatically: Dealerships that post fewer and fewer listings could be in trouble. If a franchised dealership is no longer posting new vehicles for sale on its website, that is a concern, he said.
- Expiration of a dealership's license: If a dealership allows its agreement with the state licensing agency to lapse, it could be going out of business, Wortman said.
Wortman's advice to dealers for a healthy Internet presence? Manage your website responsibly and honestly.
"The dealer should advertise all their inventory with a price, add listings as soon as they are ready for retailing and remove listings after they are sold," Wortman said. c