A Paradigm Shift
It's no secret to any dealer principal or general manager that profit margins on new cars have shrunk almost to the vanishing point. As profits shrink, more and more dealers find it impossible to continue doing business. The National Automobile Dealers Association figures vividly illustrate this decline: roughly 30,000 dealers in 1970, declining to a projected 17,000 in 2000. It is imperative that top management use every technique available to control every department in the dealership, and every outside relationship if they are not only to survive, but prosper. New technology has recently become available to provide this kind of control over one of the few remaining profit centers: the F & I office.
Online Credit Information Service Delivers Breakthrough Benefits Technology exists today that can take advantage of high speed data communication and the Internet to connect the F & I office directly to financing providers, both prime and sub-prime. This connection, and the information produced as a result can benefit your dealership in several ways:
· faster financing decisions, for better customer satisfaction
· improved F & I productivity, leading to increased financing penetration
· better control over your lender relationships
· strategic management information on both individual store and mega-dealer levels
A direct connection from the dealership to the lender's credit decisioning system delivers decisions in a fraction of the time required by traditional faxing, re-faxing, and telephone tag. When your F & I manager can simply look at a real-time queue on a computer screen to get financing decisions, there are two major benefits to your dealership. First and foremost, your customer gets better service. Secondly, F & I personnel are freed from paper shuffling and telephone tag so they can conclude more deals. F & I managers who've used this type of technology report that it enables them to handle double the number of deals they can manage in a manual environment. This results in better financing penetration - a key element in the profitability of today's dealership.
Reduce car spotting and
plug the "profit leak"
There's another benefit your dealership can enjoy as a result of electronic connection to your lenders' decisioning systems - the ability to get financing decisions at night and on weekends. When you've got an approved rate and terms on a sale, the risks associated with spotting the car are eliminated. Consider the following economics: your dealership spots a car on a weekend, and the lender's buy rate, when it's received on Monday, is half a percent higher than you expected. Theoretically, you should recontract. But doing this will eat into the F & I manager's time to pursue new deals, and may damage the customer's level of satisfaction with your dealership. Yet if you simply absorb the difference, it can mean $250 or more on an $18,000 car. It doesn't take much to see that this "profit leak" can have a significant impact on your bottom line if left unchecked.
Better information equals
better control
New technologies available today can deliver management information never before available to dealerships. Lenders maintain detailed information about their relationship with your dealership. Now you can have the same type of information at your fingertips, with no additional effort. At the touch of a key, you can see statistics and graphs that illustrate vital information like: number of deals sent, approved, declined, and booked - by lender average turnaround time for each of your financing sources
The result is the data you need to set policies for your dealerships, and to negotiate the most favorable terms with your preferred financing sources. In addition, you can look at any one of your stores individually, or get composite reports across all your stores for a global picture that can help you spot trends and take corrective action before problems become acute.
Successful Dealerships
Adapt and Prosper
It's been said that, "Successful dealerships adopt and adapt." Technology has already made big improvements in productivity and profitability in areas like parts and service. Now dealers can reap the same kind of benefits in the all-important area of F&I. By harnessing the Internet and today's computing and software breakthroughs, dealers can now have instant access to their lending sources. As a result, they can not only achieve better control over their financing operation, but also accelerate financing decisions and profitability. In today's world of shrinking margins, rapid adoption of breakthrough technologies can make the difference between prosperity and extinction.