If you're like most dealers today, you are either on the Internet in some form or fashion, or are about to be. The Internet and the e-commerce it channels is fast becoming the major if not the primary business venue of our times. One recent independent research study predicts that worldwide e-commerce could reach between $1.4 trillion to $3.2 trillion in online sales by 2003. But while technology continues to streamline every aspect of e-commerce it doesn't need to totally change the ways in which the F&I manager does business today.
Electronic commerce is an exciting new channel for delivering information, performing transactions, and creating instantaneous access to new lending sources. You need to make sure the system you choose is designed to enhance, not obliterate, the relationships your dealership has worked so hard to build.
Let's take this information back into your dealership. Again if you're like most dealers, you have seen the future and have investigated some form of electronic information exchange. In the area of automobile financing, however, you may be reluctant to impact the existing and lucrative lending relationships built carefully over time. Disrupting these relationships feels analogous to demolishing a well-crafted bridge that gets you from A to B to put up a superhighway that may zoom you from A to Z, but at a pretty high immediate cost.
The good news is: you don't have to destroy business processes that work in order to become electronically enabled . There are web-based loan application models that will accommodate your existing methods of doing business while electronically enhancing the overall lending process. But you need to know what to look for.
What's In A Name?
Although it may sound simple, look for a model that uses "open market" in its description. There are two basic types of loan application models: proprietary and open market. Propriety systems are restrictive in the kind of deals or lenders they allow to be sent through the electronic channel. This makes them limiting; any process or data outside a proprietary system can not be accommodated by it. As a result, you'll often see F&I offices with these kind of systems running "dual"operations. Some information is processed electronically. Some, particularly where it involves a long-standing relationship between a lending officer and the F&I manager, continue to be handled via the old method. Instead of the new efficiency and profitability promised by a web-based loan application, you instead get double the work, and double the risk of error.
The Open Market Solution
There are electronic loan application systems designed to accommodate existing relationships. Generally referred to as "open market," these loan application models are designed to allow communications such as digital faxes among dealers and non-participating lenders. Be sure the electronic vendor is willing to add lenders that you, the dealer, suggest.
In these and other ways, an open market model will allow your dealership a gradual and relatively painless move from the fax machine to the key board for communicating with your lenders of choice.
Rapidly Growing Internet Car Company Records $280 Million Private Equity Round
LOS ANGELES, Nov. 15, 1999 - Less than six months after public launch, CarsDirect.com, the leading automotive e-tailer, today announced that it has received commitments to fund $280 million in its latest round of financing - among the largest private equity placements in dot-com history.
At the same time, the company announced that it has named Robert N. Brisco, formerly president, Universal Studios Hollywood, as its new chief executive officer, effective immediately.
All of the company's original corporate and institutional investors - which include idealab!, idealab! Capital Partners, Primedia Ventures, Foundation Capital, Michael Dell's MSD Capital LP, and Goldman Sachs - participated in this latest investment round.
New participants in the round include investment banking firms Morgan Stanley Dean Witter, Hambrecht & Quist, and E*O Investors LLC; strategic investments that include Oracle Corp., Liberty Digital, TMCT Ventures and East Peak Partners L.P; and investments from international partners Hikari Tsushin, and Soros Private Equity Partners LLC.
"The investors participating in this round of funding are a major endorsement of CarsDirect.com's strategy and will help us to aggressively pursue the company's business initiatives as well as deliver an unparalleled customer experience," said Bill Gross, co-founder and member of the board of CarsDirect.com.
CarsDirect.com is the first nationwide online service that provides consumers a complete car buying experience - from research, pricing, customization and financing to flatbed delivery of the car to a home or office.
"We will use the proceeds from this round to build our brand, enhance customer service, and expand our program with our nationwide network of dealer partners," said Painter.
CarPrices.com Declares The First Online Price War For New Car Buyers; - Dealers Bid For The Consumer's Business
SAN DIEGO--Nov. 15, 1999-CarPrices.com, announced today the implementation of the industry's first online "Reverse Auction" for new car buyers, called the New Car Price War.
This revolutionary new technology allows dealers to bid against each other for the consumer's business. The New Car Price War has started in San Diego, where nearly 80 percent of all new car dealers are participating in the program, with a nationwide rollout to follow.
"This is a revolution in car buying," said Ahmed Ghouri, CarPrices.com's co-founder and vice president. "The New Car Price War puts the power in the hands of the buyer. The buyer configures the exact car he/she wants, and dealers compete for the sale. Each dealer offers their lowest price. End of story. You just sit back and choose."
To provide the buyer with a point of reference, CarPrices.com also provides the buyer with the dealer invoice price, the price the dealer paid for the car the buyer specifies. The bidding process lasts one business day, and the buyer can access his/her account at anytime to see what bids have been received. At the end of the bidding process the buyer has the option to accept a bid, and with a single click notifies the selected dealer. Buyers also will be able to rate the buying experience with any given dealer.
"Everyone wants to get the best deal on a car," Ghouri said. "The New Car Price War and our dealer rating system give consumers exactly what they want."
Auto Dealers Drive Internet Car Shopping Growth, NADA Says
WASHINGTON, Nov. 11 - Franchised new-vehicle dealers continue to lead the development of automotive Internet retailing, according to new research from the National Automobile Dealers Association.
NADA's survey of Internet utilization found the number of dealerships with Web sites increased to 74 percent in 1999, up from 61 percent the previous year. The NADA study also determined that 45 percent of those dealerships currently without Web sites plan to be on the Internet within the next six months.
NADA found that most dealer Web sites are now interactive, letting customers view inventory and check prices. Nearly 40 percent of dealer sites allow customers to complete finance applications online and 42 percent allow customers to schedule service appointments.
While the majority of dealer sites averaged approximately 50 hits per month, 14 percent received more than 500 hits each month. Only 9 percent of dealer sites topped 500 hits per month last year. Ninety-seven percent of dealerships with Web sites have dedicated staff to maintain and monitor their sites and 95 percent have salespeople specifically assigned to handle Internet-generated inquiries.
In addition to their own sites, more than 50 percent of dealerships subscribe to one or more third-party Internet shopping services, up from 31 percent last year.