In our recent Dealer Panel Webinar, our very own Derica Demint, VP of Corporate Enablement, spoke with Rick Ricart of the Ricart Automotive Group, Jeremy Barnhill of the Joseph Automotive Group, and Jon Peterson of Folsom Lake Ford/Kia to see how things have changed over the last 60 days for car dealerships and how that will impact lending. To view the complete webinar, click here!
In addition to the expected drop in sales due to coronavirus quarantines and subsequent lower traffic within the dealerships, they’re now looking at how to move forward and continue to recover after the shift in business.
Many of these dealerships previously delivered vehicles to customers and implemented Express Sales programs to shorten customer wait times in dealerships. Initially, many saw an uptick in customer deliveries of new vehicles – prior to the pandemic, many car buyers didn’t want vehicle deliveries, but, according to Ricart, that mindset changed. The dealers’ intent was for consumers to make their selections and start the check-out online.
The pandemic has driven deliveries, but they are not necessarily going to homes: Buyers want neutral site deliveries. Ricart did state that many are still making appointments to come into the dealership to sign the paperwork to close the deal and take delivery of their vehicle. Barnhill’s dealership adopted a minimal-contact closing process. The only contact is with the finance guy, and the surface area is sanitized several times a day to minimize spread. This has been significantly more attractive to their customers.
But because restrictions are beginning to ease, how is the market going to look moving forward? Everyone reported an increase in used car sales, driven by both seasonality and limited new vehicle inventory due to manufacturing realignments.
Demint asked what dealers are seeing from lenders on used vehicles. All said lenders are pulling back on their lending. Ricart observed they are clearly “protecting their portfolio.” He reported that the terms for nonprime borrowers are typically shorter, or they are only approving loans for higher credit customers and getting more aggressive about it. Jeremy said they’re seeing an increase in verification of employment and income more often - clearly due to the increase in unemployment due to the pandemic. Open Lending can help you safely fill the niche need for nonprime borrowers. Learn more here!
So, how do credit unions and community banks win the dealer business? All agreed on several basic tenets:
Build relationships. Some partners haven’t been in contact since the pandemic started. The ones that have been in contact and trying to work out ways to help them are getting the lead.
Create solutions that enable the dealer to maintain a profit on their sales. They have businesses to run as well, so provide incentives to help them strengthen these relationships.
Technology and car buyer focus. Many want to ensure an electronic approval process. They don’t want their customers stuck in a dealership for hours while decisions are made. If data can be submitted and returned online, it improves the overall experience for the customer and dealership. Open Lending can turn around a decision in seconds! Contact us to learn more.
Set up your business to support your partners. In other words, align staff to when dealers are busiest – typically is evenings and weekends. If they can’t get help when they need it, they have to look elsewhere for the financing. All the dealers echoed this sentiment strongly.
To succeed with your dealer partners in the future, it’s all about the basics and building solutions with the car buyers – and borrowers! – in mind. Work with your dealers to build the overall experience and bring loans into your bank or credit union.