By John Flynn, Open Lending CEO & Chairman
Contactless delivery isn’t a new concept. People have been getting newspapers via contactless delivery for decades.
According to a NASDAQ article, more than 40 million used cars are sold every year. Less than 1% of those cars are sold online. Conversely, online sales account for about 13% of furniture sales, 30% of apparel, and over 40% of consumer electronics. The auto purchasing process, up until the COVID crisis, remained largely unchanged.
Some of the growth will be short lived as far as automobile buying. There’s seems to be a human instinct for the tactile – sitting in the vehicle, literally looking under the hood, even if you don’t know what you’re looking at. McKinsey reported 77% of Americans used new ways to shop during the coronavirus pandemic and more than 40% of consumers intend to continue to use these types of services post-crisis.
Additionally, it’s important to consider why people are moving toward purchasing personal vehicles right now. A report from CapGemini showed the second highest reason to purchase a vehicle was to take control of hygiene and safety. Almost half of these respondents said they were less likely to use public transportation and ride-sharing post-crisis due to the health concerns. Furthermore, 46% minimized visits to dealerships for the same reason. Open Lending’s platform can help your credit union approve loans in 7 seconds or less. Learn more here!
The numbers clearly show that a portion of the public is ripe for a move to a more digital car buying experience. The groundwork has been set by other industries, and the coronavirus pandemic has only accelerated the move for much of the public. Look at the trends in countries that were affected before the U.S.: CarGurus reported via Auto Management Online that the UK has experienced an increase of 43% in at least one or more contactless features in the car buying process. Of these 32% of dealerships are making virtual appointments available to customers, with a staggering 46% of all vehicles are available for online purchase. And the British customers are responding – CarGurus saw a 25% uptick in usage in July and 61% of car buyers were willing to buy online, up from 33%.
The international trends mirror what’s happening in the U.S. Contactless car buying is here to stay and must become part of any business model for dealerships and lenders. Support for these new options must be a priority across automobile lenders, digital supply chain management, online sales fronts, adapting staff availability and implementing new methods of data collection.
As the physical business changes, seek out partners, like Open Lending, that can help you grow your digital footprint. Capturing documentation electronically and allowing borrowers to fill out paperwork from the comfort and safety of their couch instead of a physical location is what they're demanding. Are you ready to continue to move forward?