Digital Dealer
By David G. Neuman
Poised on the brink of a new year, a new century and a new millennium, much has been written about the automotive industry of the future. Predictions tend to concentrate on the products themselves how vehicles will be designed, manufactured, and distributed. It's true that changes in these areas are needed. A large portion of today's vehicle costs is tied strictly to distribution, for example, making it an obvious area for trimming. In fact, major changes in the automotive industry will cascade from the manufacturer level down.
What's In Store
But what about something a little closer to home? Given the advent of the Internet, it's easy to question how the dealership of the future will lookor to wonder if the old brick and mortar version will even be around. It may sound strange coming from a representative of a leading Internet channel, but I say your business-as well as those of your colleagues around the country-will remain essentially the same. I believe dealers five years from now will resemble dealers today. The concept of a dealership itself certainly won't be eliminated. Instead, needed change will occur, as mentioned, in the ways a vehicle is manufactured, bought, and delivered. Imagine this scenario: a customer clicks on a Web site to view car specifications. She then orders her vehicle online, choosing from an array of features and options. The newly built vehicle will then be delivered to a dealer's door within a week, where the customer can pick it up. In this very probable scenario of the future, the dealership hasn't been eliminated: the process has just been streamlined.
Credit Transactions
The same will hold true in F&I. The future will bring supplements rather than replacements of the systems we know today. In other words, electronic indirect finance will continue streamlining the processes already in place today, making it faster, easier and better.
Captives will still offer subvented programs that drive consumers to the dealership. What will change is the way in which new relationships are formed. Take, for instance, the vertical relationships that will likely exist between the captives, non- and sub-prime players. The securitization market will have stabilized, which will force the smaller entities to take larger risks.
How to Prepare
How can you prepare for profitability in this on-line, interactive future? Begin by taking advantage of capturing and managing the valuable data in an F&I office. Gross profit on the sale of an average new vehicle today is less than the average finance profit. Yet all of the data capture and management is deployed in the sales arena, not the area that has the potential for greater profit (F&I).
Remember, too, that your lenders are motivated to share aggregated data. They spend billions to try and outguess their competition with regard to risk and pricing. In the new electronic mode, lenders will have the capacity to deliver far superior products and pricing once risk-related data is made available to everyone.
As a vice president of sales and marketing for e-fin Electronic Financial Marketplace, David G. Neuman uses his unique background in both the finance and automotive industries to further the development of the worldÕs first fully comprehensive electronic financial marketplace for automobile credit applications. dneuman.dealeronline.com
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