Although supply chain issues — specifically the lack of semiconductor chips — continue to impact auto production in the U.S. and worldwide, forecasters optimistically predict an upward trajectory in the global automotive industry in the coming months. This is encouraging news for auto finance lenders and auto dealers as they prepare for a post-pandemic recovery.
A November 2021 report from Statistica projects that electric and connected vehicles, autonomous driving, and mobility services will lead to economic recovery on the heels of 2020 economic contraction. In fact, experts expect the auto industry to reach pre-pandemic production volumes beginning in 2023. This can be seen in some important predictions for 2023:
- ~$9 trillion (USD) projected global automotive industry growth with 38% in new vehicle sales;
- 88 million light vehicles to be produced;
- 4% growth in light vehicle sales;
- 4% projected market share of electric vehicles sold; and
- Advancements in real-time connectivity and predictive analytics for fully autonomous vehicles.
What can auto finance lenders and auto dealers do in 2022 in anticipation of these opportunities? They can leverage software-as-a-service (SaaS) technology now to close more deals today and prepare for that post-pandemic economic surge.
SaaS technology allows the industry to capitalize on the evolving auto finance market, close more deals and enhance the customer experience. Here are the top four ways SaaS can transform the auto financing process.
1. Automate and accelerate credit decisioning
Today’s connected consumers expect speed, simplicity and easy access in all their transactions, including the auto finance process. When the pandemic physically shut down dealerships, many turned to digital solutions. This digital-first shift evolved into an omnichannel business model, a hybrid of online and in-person car-shopping experiences.
This digital maturity is expected to grow. Choosing the right technology, such as SaaS-based automotive finance software, will help automate existing manual processes, accelerate decision-making capabilities, and make it possible to close more deals faster.
For example, many auto dealer point-of-sale systems cannot display more than one offer from a lender. For alternatives, a dealer may not have time to reach out and negotiate a more suitable offer. A dealer portal enabled by SaaS technology shows multiple offers at the same time, for example, one offer with a lower monthly payment and another with a different up-front payment. Multiple offers can give dealer partners an advantage over competitors on a tactical level.
2. Empower auto dealers to negotiate loan variables
Often, customers are ready to buy until the money terms come up, or there’s a delay in reaching agreeable terms.
For example, the end buyer may balk at closing the deal if they are unable or unwilling to agree to $1,000 as a down payment. When this happens, the dealer typically contacts the auto finance lender to discuss other options, which adds time to the buying decision and creates the risk that the customer goes to another auto dealership for a quote or abandons the idea of buying a car altogether.
Further delays arise when auto finance negotiations occur during an evening or weekend. The lender may not respond right away to offer other lending options during off hours. Asking the customer to check back later for an updated loan offer doesn’t work with today’s connected customer. They can easily go online, shop around and finance their vehicle elsewhere.
With the right technology, lenders can offer a dealer self-service portal that allows the adjustment of loan variables. This enables the dealer to change the monthly payment, down payment or terms without needing the lender’s involvement every time.
3. Reduce documentation burden
Auto dealers want to spend their time with customers, not managing records and files, or hunting down and waiting for documentation to close a deal. And customers expect a digital and paperless experience, especially when it occurs in other aspects of their connected lives.
Fortunately, SaaS technology ensures a seamless end-to-end digital experience that automates the document management process. For example, SaaS connects systems with third-party providers like DocuSign to manage workflows online and send and sign documents with electronic signatures fast and securely, without paperwork or delays.
SaaS technology helps transform the lease and loan origination and portfolio management process to reduce the documentation burden, save time and enhance the customer experience.
4. Expedite the contract package to close the deal faster
Receiving the contract package is the final crucial step auto dealers need to close deals.
The process is slow and drawn out for everybody involved. Dealers often ask for employment verification at the start of the process and then ask for identification a few days later, resulting in several delays to compile the complete contract package.
To expedite the auto finance process, you want to automate as many manual steps as possible. APIs powered by SaaS leverage third-party services, such as Experian, to receive credit, income and employment information, providing a consumer self-service option when more information is required. A self-service process that leverages text messages and websites to finalize the package conveniently and securely could be one way to combat this hurdle.
Additionally, open-banking technology — popular in the U.K. and gaining acceptance in the U.S. — digitizes the identity-verification process and eliminates manual data entry and paperwork. Rather than asking borrowers to fill out paper or online forms with their personal information, borrowers can easily transfer this information digitally using their banking app via an open banking technology provider.
When crafting a post-pandemic business plan, consider these top four ways SaaS auto finance technology can make dealer partners more profitable — and car buyers happier. SaaS technology will prepare you and your auto dealers to present multiple offers quickly, without delay and red tape, deliver a contract offer painlessly, create a better financing experience for your customers, and grow your business.
Shim Mannan is the global head of services sales enablement at Solifi, a global fintech software partner for auto finance (formerly known as IDS, White Clarke Group, and William Stucky & Associates).
Auto Finance Innovation Summit, the premier event for technology in auto finance, returns April 25-26 in San Diego. The event will showcase today’s technology and tomorrow’s innovation-driven opportunities to position your company for success in this fast-paced digital era. To learn more about the 2022 event and register, visit www.AutoFinanceInnovation.com.