A Match Made in Lending
The auto finance business functions best if lenders and dealers work in an enterprise fashion. “First and foremost, [lenders] have to see it as a partnership,” BMW’s Smith said.
“You might not agree on all elements, but what you have to agree on is: What is good for your customers, is good for your dealers and is good for your business,” Smith said. “If it’s not good for our customers, then that equation just doesn’t go any further — it doesn’t work.”
It’s important for lenders to understand the role dealers play in the financing process. “The business is about being user- and dealercentric,” said U.S. Bank’s Sullivan. “Find the best customer experience for the end user, ensure your dealer and consumer are benefiting from the experience. Dealers aren’t competitors; they add value.”
Western Funding, however, notes the importance of selective enrollment when onboarding dealers. “The key focus for us is to have alignment of credit expectations for the dealers,” Murray said.
“What I mean by that is our program can’t help every dealer, but we need to find the ones that it can help,” Murray said. “Dealers with the right inventory, the right focus for their own business — those are the ones that we need to find and understand what they are trying to do with their business to see if there is an opportunity.”
“The dealer and the lender are on the same side — or they should be,” he said. “In other words, getting all the information that’s possible to understand the risk of the deal and price it appropriately so that it can meet or exceed performance expectations.”
Strengthening the lender-dealer relationship is about creating alignment with loan deals and pushing for further advancement with technology within business operations. However, to have a successful lender-dealer relationship, both parties must establish trust and understand that the auto finance process begins and ends with a human relationship.
Lenders with strong auto-decisioning capability have a competitive advantage today because everything is based on speed and convenience, Ricart said.
At the same time, lenders that put the extra effort into creating a human bond with their dealer partners amid technology disruptions position themselves for success. “We’re applying technology where we can to make the program better for our dealers,” said Western Funding’s Murray. “That’s important. But that doesn’t mean technology is going to drive everything.”
