Archive for the ‘News’ Category

Vehicle financing ‘easy,’ consumers say, but change may happen anyway

So here’s what your customers think about the vehicle financing process.

Based on a survey of 2,200 consumers by FICO Decisions, the practice of most shoppers obtaining financing through the dealership is headed for a change – perhaps rapid change.

Is your dealership ready for such a change in consumer behavior?

“There is a substantial disconnect between the current channel mix and consumer preference,” said FICO Decision’s report on a key finding. Consumer behavior may be reaching a “tipping point where the shift to digital happens rapidly given consumer demand and availability of new technology.”

dealer-matters

While 73 percent of respondents said they obtained their last financing through a dealership, only 38 percent said they would inquire there for their next vehicle purchase, according to FICO Decision’s 2018 Consumer Survey of Automotive Finance Perceptions.

The shift among those consumers went toward applying online and visiting a bank or other institution, representing a significant change from current behavior in which only 20 percent of shoppers total obtained financing through lending institutions and online. The survey showed that more than twice as many consumers (32 percent) would seek financing through a bank or other lending institution and five times as many (29 percent) would apply via a laptop, tablet or other device.

Other findings of the survey are:

  • Interest rate/APR (94 percent) and monthly payment amount (92 percent) are the most important factors when shoppers are seeking financing, more so than length of loan term in months (88 percent) and down payment (82 percent), which “implies that financing proposals that are optimized to maximize for these aspects will be most impactful with consumers.”
  • Only about 21 percent of consumers learn the amount of financing for which they qualify before vehicle shopping, providing an opportunity for “risk-aware marketing” that results in prime and subprime customers getting “the best offers and options for their personal financial situation.”
  • More than half (52 percent) of consumers consider only one financing offer, which provides the opportunity to “present multiple loan offers with differing terms … to optimize the consumer’s preferred terms and avoid the customer leaving to shop elsewhere.”
  • More than six in 10 consumers (62 percent) must wait more than 30 minutes to complete their transaction with 13.6 percent waiting “a few hours” and nearly 10 percent overnight or longer. That means backend systems “still have some ways to go in terms of speed and efficiency.”
  • Only about 31 percent of vehicle shoppers were offered insurance and just 23 percent were offered add-ons such as floor mats, roof racks, etc., ancillary products and services on which dealerships often make additional margin.

Still, according to FICO Decisions, “Most consumers report that the financing experience was easy and low-effort for them … consistent with [an] earlier finding that customers feel in control of the process, understand the terms and feel they got a good deal.”

In fact, 62 percent of survey respondents rated their financing experience “easy,” while only 8 percent rated it “difficult,” with the rest falling somewhere in between.

The survey covered nine countries, but most results were broken out by country.

Greenwood Hubbard Chevrolet

2635 N. Main St.
Hubbard, OH

Dealer principal:  Greg Greenwood

General manager: Denny Denoi

Brand represented: Chevrolet

How long in business: 11 years

No. of employees: 30

Annual unit volume (approximate): 1,800

SC Dealer Relationship Manager: Robert Plemel

What makes your dealership special:

Our business has been in the community for years, and we value our customers. Our customer service stands out from the competition, and the people that work here create that culture. We are able to accommodate and serve our Ohio and Pennsylvania customers in a highly competitive General Motors market.

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DRM comment on what makes dealership special:

Greenwood Hubbard Chevrolet has always given us looks at the nonprime business, and we have had success over the years. They use our Dealer Extranet to increase their volume, and their ability to structure their own deals has helped increase their bottom line. Greenwood is an ideal Santander dealer, and we appreciate growing their business.

How long working with Santander Consumer USA: 10 years

What you like about doing business with Santander Consumer USA:  

Santander Consumer USA has been a consistent lender, and we count on them month in and month out.  Our buyer and dealer rep are always ready to help put deals together. Having access to the Dealer Extranet saves us time and gives us more flexibility in our deals.

One best practice that contributes to your dealership’s success:

Greenwood’s number one best practice is catering to the customer and putting the customer first.

Describe your experience with Santander Consumer USA:

Santander gives us opportunity for almost any customer that walks through the door. They are a full-spectrum lender and every year it seems their footprint grows within the dealership. We put our customers first and knowing that there is a flexible business partner working with us, we know we can.

– Tony Pesce, Finance Manager

Tony Pesce, finance manager, works a deal at Greenwood Hubbard Chevrolet.

Tony Pesce, finance manager, works a deal at Greenwood Hubbard Chevrolet.

5 steps to updating your brand and beating your competitors

Dealership branding really matters.

Whether your dealership is large, medium or small, its competitive survival may depend on how reputation – your brand – plays in the local market.

For example, franchise dealerships representing the same manufacturer within a few miles of each other in a major metro area reasonably could be considered competitors if a consumer had settled on that brand but is concerned about his/her overall customer experience.

(In this case, the four dealers are franchisees of Toyota, the carmaker with the highest brand value.)

062118 IL 5 steps to updating your brand and beating your competitors

Even a quick-and-dirty online search reveals that one dealership scores 4.5/5 stars with more than 4,000 reviews, while the others score 4.1/5, 4.0/5 and 3.7/5 on 600 to 1,300 reviews.

And if there’s any doubt about whether the dealership brand had anything to do with the 4.5-star rating, this sort of review from satisfied customers should put that to rest:

“I am so happy that my uncle found this place to buy our cars years ago,” one customer wrote online. “I have had two from here, [and] I could not be more pleased with the caring staff, always greeting with a friendly smile and always putting customer satisfaction first!”

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What your dealership can learn from study of top brands

How your dealership can get more 5-star customer reviews online

So how does a dealership build the sort of brand value apparent in the example above?

Here are five steps Kantar Millward Brown market research firm suggest in its study, BrandZ Top 100 Most Valuable Global Brands 2018:

  1. Value the past

“Find the bits of brand heritage that can add enhancement to mainstream brands and tell a more textured and interesting story … Explain how the brand became part of the larger culture.” Obviously, the same idea could be applied to branding for a local dealership.

  1. Talk about the future

“Consumer wants to know that the car they purchase today will be worth something tomorrow. Being seen as innovative and future-focused helps reassure consumers that the brand will sustain its value.” In this case, a dealership might talk about the reputation of its service department.

  1. Think differently

“Car brands traditionally have been divided into categories – mass and class. It is now more useful to think about how the car brand fills a particular consumer need. In this dichotomy, the brand is either utilitarian (for getting from Point A to Point B) or experiential (for enjoying the journey).”

  1. Fix the buying experience

“People buy cars similarly to the way they buy other things – with a lot of online research and a trip to brick-and-mortar locations for touch and trial, as necessary. Typically, car buyers do not expect their trip to the dealer to be uplifting. Surprise them.”

  1. Be electrifying

While it is important to communicate the practical aspects of owning a particular vehicle, “the excitement of driving needs to remain part of the brand story,” as well as the customer experience.

“We believe the brands that will gain the most in coming years … won’t be finding stories so much as finding points of connection,” wrote Simon Law of Possible digital-marketing agency. “The truth they have to tell will need to be matched by the values they live by and utility they offer to their customers.”

That is, your advantage may be in differentiating your brand’s connection to customers, and not just by talking about the vehicles on your lot and in your showroom.

What to expect from your SC Dealer Relationship Manager

Sales rep.

Area Sales Manager.

Dealer Relationship Manager.

That describes the evolution of a company, Santander Consumer USA in this case, not just a job title, where the emphasis shifts from “sales” to building relationships and creating win-win scenarios.

On The Road Ahead, we are compelled to help you boost results.

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“The DRM provides one of the most important connections between dealerships and Santander,” said a member of SC’s Dealer Relationship Team. “Dealers who take advantage of the knowledge and opportunities provided by our DRMs see the difference in their results.”

So what can you expect from your SC Dealer Relationship Manager, or DRM, on The Road Ahead?

More incremental business

Learn how SC can help you put more deals together and keep you up to date on our credit policies.

Faster deal processing

Get help creating clean packages while keeping current on SC’s funding policy and requirements.

Dealer Extranet training

Learn how to maximize profit on every deal with our rehash tool and to use other powerful features.

Marketing opportunities

Help generating new traffic to your dealership via direct mail program and RoadLoans lead exchange.

Dedicated point of contact

A resource for regulatory, policy and industry updates, and link to best-in-class fraud awareness training.

“The DRM is someone who is there to help guide dealers through any SC-related scenario,” said Howard Greenblatt, a New Jersey DRM. “It could be walking them through how to use our Dealer Extranet to helping with a deal in funding to letting the dealer know when and how to contact another department within SC for additional help or guidance. And DRMs are always just a phone call, text or email away.”

“Santander Consumer USA has been a consistent lender, we count on them month in and month out,” said Tony Pesce, finance manager at Greenwood Hubbard Chevrolet in Hubbard, OH.  “Our buyer and [Dealer Relationship Manager] are always ready to help put deals together … Santander gives us an opportunity with almost any customer that walks through the door.”

Chances are you won’t have to go looking for your DRM – he or she probably will find you. But if you don’t hear from us soon, you may contact SC online for quick attention.

What your dealership can learn from study of top brands

Best-in-category is no longer good enough.

That’s just one powerful insight from a recent study, BrandZ Top 100 Most Valuable Global Brands 2018, by Kantar Millward Brown market research firm.

And while it may seem the study findings are aimed only at the largest companies on the planet, many of the insights about branding may translate for your dealership and local market, even if you only sell vehicles to shoppers within a few miles of your store.

But what if the automaker you represent is at or near the top of brand-value rankings?

2019 Ford F-150 Raptor

That may not help if your dealership’s brand value is significantly lower than nearby competitors from the way you sell your product to the quality of your service department.

“We’ve always needed to differentiate among equivalent products,” wrote Belle Frank of Y&R advertising. “We’ve always needed to establish an emotional connection beyond function.”

“Fifty years ago, it was about buying a red, blue, or green blender. Now, it’s harder and the stakes are higher. But people still make decisions emotionally and justify them rationally. … [And] in the end, when a brand doesn’t live up to its promise, it’s dead in the water.”

Here is some key advice provided in the BrandZ study’s “Brand Building Action Points”:

  1. Improve customer experience

“Best-in-category is no longer good enough. Consumers compare experiences across categories. In that respect, all brands are competing with … acknowledged brand-experience leaders.”

  1. Speed is imperative

Your competition is changing continuously, and you can’t afford to be left behind. Well-established brands will increasingly compete with fast-growing competitors.

  1. Heritage cuts both ways

“It can add depth and purpose to brands and, at the same time, it can add heavy ballast, [when taking action] becomes churned into the existing brand heritage … Brands need to rejuvenate themselves with internal changes and by affiliating with innovative partners.”

  1. Find your voice

“Consumer interaction with brands is shifting to voice … having an audio identity that is recognizable and relatable. Voice is fast becoming another brand asset, like a slogan or logo.”

  1. Communicate a purpose

“A purpose helps differentiate a brand, which will be increasingly difficult and necessary … Purpose needs to be rooted in the brand and more than a marketing brief. Communication needs to be done sensitively or the brand risks looking disingenuous.”

  1. Strengthen the brand

“In a world where brand choice is increasingly determined [online], brand becomes even more important. Without a strong brand, the path to purchase will be the path of least resistance.”

“Branding is moving to experience, with reviews, recommendations and live streams playing an important role,” wrote Doreen Wang of Kantar Millward Brown, the market research firm. “Voice is becoming a brand. Every brand needs to have its own voice.”

And that’s not all, according to Wang.

“Perceived innovation will be critical in the future. And innovation is not just about product development, but also about customer service and communications.”

“The most foolproof way to survive is the most traditional: Build a brand that means something,” wrote Andi Davids of Superunion branding agency.

That means staying customer focused and helping your target audience.

These five car companies have the most valuable brand names

What’s in a name?

Brand value – the estimation of how much extra people will pay or how often they will choose one particular brand over another brand.

It helps separate the top automotive brands from the rest – five in the case of the BrandZ Top 100 Most Valuable Global Brands 2018, compiled by Kantar Millward Brown market research firm.

Those five are Toyota (36), Mercedes-Benz (46), BMW (47), Ford (96) and Honda (97). The remainder of the Top 10 car brands are Nissan, Audi, Tesla, Maruti Suzuki and Volkswagen, respectively.

061218 IL These five car companies have the most valuable brand names

Perhaps it should not be a surprise that the top mainstream brands on the Top 100 list also are three of the top five in sales worldwide, with Toyota No. 1, followed by Ford and Honda at Nos. 3 and 5. Mercedes leads the premium vehicle segment at No. 10 in sales worldwide followed by BMW at No. 12. Only Volkswagen and Nissan, which were not on the Top 100 list made the top five in sales.

Mercedes-Benz was the only automotive company that scored a 5/5 in “brand contribution,” a measure of how much the name drives sales and enables a brand to command a price premium independent of other market factors. Toyota, BMW and Honda all scored 4/5 and Ford scored 3/5.

 

So what does all this mean to you as a dealership – besides the obvious if your brand is in the Top 100? We’ll have those answers in upcoming posts on the Inside Lane blog.

 

Toyota’s top automotive industry ranking overall was no fluke, based on previous BrandZ value reports. This was the 11th time in 13 years the most-valuable brands study ranked Toyota No. 1 among automotive brands, missing only in 2010 and 2012, when it ranked second to BMW on the Top 100 list.

Toyota’s brand was valued at nearly $30 billion, up 5 percent, because of its reliability and the strong demand for its SUVs, according to the research company, while the Mercedes brand was valued at more than $26.5 billion and BMW was valued at more than $25.5 billion. The study valued Ford, the only American-based automaker on the list, and Honda brands at less than half that of Mercedes and BMW.

Four of the five brands, excluding Ford, increased in value compared to last year, but all five fell in the rankings compared to other companies making the list.

Eight of the top 10 brands overall and 17 of the top 20 brands were American companies, with Google, Apple, Amazon and Microsoft comprising the top four. The study valued Google and Apple, both of which are experimenting with self-driving vehicles, at more than 10 times the top automaker, Toyota. The overall value of all these companies is significantly greater than the brand value.

The overall value of all these companies is significantly greater than the brand value.

SC confident that revamped program can speed dealers’ success

Confidence breeds success.

Or, perhaps, in the case of vehicle sales, speeds success.

When you’re on The Road Ahead, success is measured in dollars and cents, of course, but also in the customer and business relationships you build along the way.

That is why Santander Consumer USA (SC) is confident about our enhanced lending program.

It scores on both of those important measures.

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Here’s what that means to you, the dealer:

  • A pricing strategy calibrated to a dealer-favorable call.
  • Lower price and discount fee and a fresh approach to credit underwriting.
  • Flexibility on financing terms and increased dealer participation.
  • Affordable direct-mail and lead-exchange programs to increase local marketing impact.
  • Most application responses are received within seconds of submission reducing wait times.
  • An enhanced dealer performance management process that means we’re constantly looking for opportunities to improve our relationship.

“SC has represented financial strength and stability, having provided sound programs and unsurpassed support to our dealer associates for more than a decade,” said one sales executive. “That means you can count on SC to be working hard for your success wherever the economy goes.”

Now, it’s easy to claim “strength and stability,” but quite another thing to have numbers to back it up. Here are some numbers that show SC has what it takes to help most dealerships succeed:

  • Top-5 used-car lender in the U.S. with $49 billion managed portfolio.
  • More than $20 billion in annual originations the last two years and higher expectations for 2018.
  • 12,000-plus active dealers served by a nationwide team of Dealer Relationship Managers.
  • 82 percent application-approval rate nationwide with high closure and competitive backend.
  • 79 percent lower fees on average per contract than in 2008.

“A lot of banks look for reasons to not make deals, SC looks for reasons to make deals,” said one dealer.

“It’s amazing when you write all this stuff down and you see where we’ve been and where we’re going,” said Vince Meglio, senior vice president of sales and sales operations at SC.

If you would rather hear these and other details in person, contact your Dealer Relationship Manager or contact our sales department by filling out and submitting a form online.

Brown Daub Kia

3600 William Penn Highway, Easton, PA

Rob Lakey, left, and Kyle Arcury, sales managers, with Matthew Dancsecs at Brown Daub Kia.

Rob Lakey, left, and Kyle Arcury, sales managers, with Matthew Dancsecs at Brown Daub Kia.

 

Dealer principal:  Tom Daub

General manager: Gary Lee Eckley

Brand represented: Kia

How long in business: 20+ years

Number of employees: 50+

Annual unit volume (approximate): 1,940

SC Dealer Relationship Manager: William (Bill) Smith

What makes Brown Daub Kia special:

We are a family-oriented dealership. We offer a unique experience for our guests to be treated like “family.” Guests are given a visitor guide upon arrival to help determine which options work best for their needs and credit situation. Gary Lee Eckley has worked for years to establish himself as “That Family Guy,” which is promoted on various news media and social media outlets.

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DRM comment on what makes this dealership so special:

The staff at Brown Daub Kia is truly a team after one goal – helping every customer that walks into their showroom. They are able to use our program to its fullest extent to ensure customer satisfaction and dealership profitability. What’s most impressive is their processes and paperwork: This store maintains a two-day turnaround in funding, on average, including through our busiest season. Brown Daub Kia is a valued dealer.

How long working with Santander Consumer USA: 15 years

What you like about doing business with Santander Consumer USA:  

Santander offers a unique platform to rehash deals. This is not only a huge time saver, but also helps in finding the right vehicle based on our customer’s needs, all while maximizing profit potential. We also like the flexible credit hours and the availability of the credit buyers and funders to help, not only to make sure we can put a deal together but to make sure the deal sails through the funding process.

Describe your experience with Santander Consumer USA:

We’ve had a lot of experience with customers who maybe had little to no credit. With the program offered by Santander, we’ve been able to open the door for many people who have not had success at other dealerships. We are happy and fortunate to have been partnered with Santander, and look forward to many continued years of this very successful relationship.

– Matthew Dancsecs, General Sales Manager

How your dealership can get more 5-star customer reviews online

Five-star reviews.

They’re not quite as rare as sunken treasure – but almost.

And with most shoppers spending much of their time online researching their next vehicle purchases, good reviews and bad can get around quickly.

Especially with websites such as DealerRater, CarGurus, Cars.com and even Kelley Blue Book giving new- and used-vehicle shoppers the chance to provide reviews of their experiences.

Would you purchase a car at a dealership rated four stars if another close-by dealership rated five stars?

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“If shoppers like you, they’re going to tell their family and friends,” said DealerRater. “Customers want to talk about you when you do right by them.”

For example:

“Awesome experience! Would highly recommend to another customer looking to buy a new car without a high pressure sales experience,” wrote the customer of a Tulsa, OK, dealership.

That new-car customer gave the dealership five stars overall as well as for customer service, quality of work, friendliness and pricing, pretty much in line with its 4.9-star average rating from 1,139 reviews posted on DealerRater and 4.9 rating from 1,383 reviews on Cars.com.

So how do you try to ensure your dealership gets more five-star reviews?

053118 IL How your dealership can get more 5-star customer reviews online

DealerRater provides at least some of the answers in a report, What makes a five-star dealership review, which is based on an analysis of 1.4 million reviews of dealerships and salespeople that customers wrote last year on DealerRater.com and Cars.com.

“We discovered some compelling reasons why customers love dealerships – and we identified the main reasons why customers complain about their experiences,” said DealerRater in the report introduction.

Here are the top five reasons DealerRater said customers leave five-star reviews:

  1. The dealership provides a consistently great experience on the lot and in the service lane.

“Customers call out a great buying experience as the second-most important attribute contributing to a five-star review. But great service overall, including an excellent service department, constitutes the most important factor … influencing positive dealership reviews.”

  1. The dealership’s entire staff acts like customer service professionals.

Positive customer reviews single out people, “especially for being friendly, knowledgeable and helpful … [while] providing a stress-free experience goes a long way.”

  1. The process is painless with speed and ease of service throughout the purchase experience.

“Speed and ease of service are essential … Once customers are at the buying stage on the lot, they’re eager to act. They don’t want to wait around completing paperwork.”

  1. Customers feel like they’re getting a deal – but not necessarily the lowest price.

“Price is definitely a topic [about] which shoppers typically have questions and uncertainty. Taking time to explain a price and why it’s the best deal possible for a shopper … will make the difference.”

  1. Dealerships offer hands-on experiences with vehicles.

“When you offer test drives, you look good … The decision to buy a car may come down to two people shaking hands on a lot, but experiencing the vehicle creates the all-important emotional connection.”

The bottom line, according to the DealerRater report, is that “getting a great customer review comes down to acting like a customer service representative.”

So now that you know about the factors that influence customer reviews, DealerRater suggests, “You can step up your game by treating customer reviews as a process that you manage all year round … Reviews are not a necessary evil. They’re the source of differentiation.”

Working on these areas may make a difference in your reviews and your business.

Why dealers must keep compliance ‘near top of to-do list’

Regulatory compliance for dealers and lenders won’t be going away.

Whatever limits have been imposed on the federal Consumer Financial Protection Bureau (CFPB), there are sound business reasons to maintain the discipline it brings to automotive sales.

Regulatory compliance still “should be near the top of every dealers’ to-do list,” suggested a report in Auto Remarketing after Congressional approval of legislation overturning the CFPB’s 2013 “guidance” on indirect auto financing that increased oversight of lenders and dealers.

052918 IL Why dealers must keep compliance ‘near top of to-do list’

“If you think changes at the Consumer Financial Protection Bureau will give dealers a little breathing room, take a deep breath,” the report said. “Then consider this: States are stepping up their scrutiny.”

Santander Consumer USA (SC), one of the nation’s largest non-prime lenders, has cited “a push at all levels of government to regulate auto lenders and dealers more closely.”

Beyond that, SC’s Enterprise Fraud and Dealer Management unit suggests that continued attention to regulatory compliance issues can result in important dealer benefits, including:

  • Improvement in overall customer experience and loyalty
  • Reduction in consumer harm and reputational risk
  • Reduction in credit stipulations
  • Reduction in funding delays to dealerships
  • Reduction in post-funding disputes and potential unwinds

Because “the number of identity theft, fraud and elder-abuse complaints reported to consumer agencies has increased significantly,” SC suggested, failure to remain vigilant can result in increased overhead costs, higher prices to consumers, lower sales volume and lower profits and growth.

“One area of increasing concern has been ancillary products,” reported Auto Finance News (AFN).

“There has been an incremental compression in rate participation margins … and dealers are trying to make up that income in other areas [such as] ancillary products,” Kenneth Rojc, managing partner of the automotive finance group at Nisen & Elliott, told AFN.

Rojc told AFN that “regulators will be more keen on pursuing deceptive practices during the financing process, especially disclosures of service contracts and guaranteed asset protection policies.”

While regulatory compliance presents challenges, “it should not be viewed as an obstacle, but rather an opportunity,” said Michael Sanders, vice president of Enterprise Fraud Management at SC.

“When practiced effectively, regulatory compliance assists in preventing fraud, stopping deceptive practices, and protecting customers,” Sanders observed.

“By embracing a standard of regulatory compliance, we demonstrate our commitment to doing the right thing for our customers,” Sanders said. “This commitment can be a differentiator that sets our company apart from the competition, and builds consumer confidence in the industry as a whole.”

If you have questions or are uncertain how to improve your compliance systems and processes, contact your SC Dealership Relationship Manager, who can guide you to the appropriate resource.