A Shift in Consumer Behavior is Coming to Auto Finance, Industry Experts Say | Auto Finance News | Auto Finance News

A Shift in Consumer Behavior is Coming to Auto Finance, Industry Experts Say

weatherVaneORLANDO, Fla. — A shift in consumer behavior is coming for both auto lenders and dealers when dealing with car shoppers in the near future, according to Monica Orluk, director of sales engineering for Fiserv, and Peter Kidd, senior vice president of consumer auto business at Fifth Third Bank. The two spoke at the Consumer Bankers Association Live 2015 conference Tuesday in Orlando, Fl.

Many consumers are increasingly looking for a more efficient, digital experience when financing and purchasing a car, Orluk said during a presentation called “Consumers Shift Gears: How Do Banks Grow Their Business in a Self-Service World.”

If consumers lives their lives digitally, Orluk said, it makes sense that when they buy a car, they’ll want to do so digitally, and while older generations have had the opportunity to see technology develop, younger generations don’t know a different world.

For example, an overwhelming 74% of consumers pay their bills online, according to information cited in the presentation, while 58% of consumers own a smartphone, 42% have a tablet, and by the year 2020, 40% of new vehicles will be purchased by millennials.

Ultimately, lenders have to fit into the purchase experience that the consumer wants, Orluk said, and in a “utopian experience” for many, a consumer would apply for a loan on a smartphone, review documents on a tablet, and check loan balances and make payments on a laptop.

However, in order to make purchasing a car more appealing to younger generations, Kidd said, the amount of time spent in a dealership needs to be shortened significantly. On advice from manufacturers, national dealer groups should work on getting consumers out in less than an hour, he said, including time spent in the F&I office.

In fact, he said, the average number of visits to a dealership when purchasing a car has dropped to one, down from four a few years back, which suggest that consumers only visit the dealership to physically take ownership of the car.

However while some dealers are ready to embrace the change, Kidd said, some remain hesitant to accept the shift in consumer habits and lenders need to remain mindful that the dealer is a consumer too.

“The best solution [for lenders] is to give consumers what they want and keep dealers as part of the process,” Kidd said. “It’s easy to say, harder to do.”

Yet regardless of dealer hesitancy, he said, consumers are speaking “loud and clear,” and ultimately will buy from car dealers that give them what they want, when they want it.

“The train is leaving the station, you can get on board or get run over by it,” Kidd said. “That’s kind of where we’re at right now.”

Learn more about risk and compliance in auto finance May 18 and 19 at the Auto Finance Risk & Compliance Summit 2015 in San Diego. Register here.

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