Two U.S. public dealership groups are focused on diversifying customer finance options to boost sales and improve customer experience.
Arranging financing for customers is a main profit driver at Lithia Motors Inc., according to executives, and specialized finance managers help keep customers on the road. Meanwhile, Asbury Automotive Group launched an online loan marketplace in the second quarter to let customers select financing from multiple lenders using dealership websites.
Lithia CEO Bryan DeBoer said to increase profits and vehicle sales, Lithia must focus on customers who need extra help transitioning to their next vehicle. The Medford, Ore., retailer arranged financing on 74 percent of the vehicles it sold last quarter.
"The majority of our customers need specialists who can help obtain a financing structure that balances their credit rating, desired vehicle purchase, potential negative equity and an affordable monthly payment," DeBoer said last month during an investor call.
Half of Lithia's customers have a credit rating of 700 (the center of FICO's "good" range) or below, and 71 percent with trade-ins have negative equity, executives said. Lithia customers have an average $5,100 in negative equity on trade-ins.